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The global Covid-19 pandemic has made its presence felt in South African retail and consumer-focused businesses, especially in tourism and hospitality, but the full impact on earnings, cash flow and employment will last far longer than a three-week lockdown. With the 21-day nationwide lockdown in place, the full effects will now ripple through all sectors and industries at least until the end of this year – in an “economic cycle like no other we have ever seen”, said University of Stellenbosch Business School (USB) guest lecturer in corporate and development finance, Jason Hamilton. Hamilton, a director at First River Capital, said with the South African economy already under severe pressure – the SA Reserve Bank (SARB) having revised its GDP forecast down to 0.2% for 2020 – it was expected that the impact of slowed-down global growth (expected to contract by 2.1%) due to the pandemic would see South Africa’s GDP retracting by between 2.5% to 3.5% with some models estimating up to 5%. Moody’s downgrade of South Africa’s credit rating (27 March) would result in further outflows which the country can ill afford, he said, and the cost of debt would increase. “Up to the lockdown businesses were able to trade and generate some earnings to keep lights on, keeping employees employed and earning some level of income.—Agencies
