The economic impact of the Coronavirus on South Africa

Trade and tourism disruptions resulting from the COVID-19 (Coronavirus) might cost South Africa as much as R200 million and 1,000 jobs, according to simplified estimates from Big Four accounting and advisory firm PwC. The firm recommends that South African businesses prepare for disruption.

PwC’s recommendations are contextualised against the rapid proliferation of the virus, not only in Wuhan and the surrounding regions but also across the globe. Recent reports of confirmed cases and casualties in Italy have sparked concerns in the international market that the situation is spiralling out of control.

Aside from the virus’ devastating human cost, PwC points out that its spread might cause significant disruption to supply chains across the globe. Wuhan itself, for instance, is a major transportation port for 6,000 companies from 80 markets across the globe, and its quarantine has already been a major disruption.

Add to this the restricted movement of goods and people from the rest of China as well, and most trade partners have reason to worry. China is South Africa’s largest trade partner in both the imports and exports segment, significantly larger than Germany, the US, India and Saudi Arabia.

“The scope for COVID-19-induced business disruption in South Africa is vast. China is South Africa’s largest supplier of imports and biggest buyer of exports. Mobile phones, for example, are South Africa’s largest import category by value from China, with the latter supplying 85% of South Africa’s mobile phone imports. A disruption in this context would have knock-on effects on the wider telecommunications sector,” states the report.

China is also among the primary sources of tourism for South Africa, while the propensity of Chinese tourists to shop while abroad is remarkably beneficial to the South African economy. So much so that South Africa could lose R200 million from disruption in the tourism sector alone.

Blows of such magnitude are not only bad for South Africa’s already deteriorating GDP figures, but are also likely to affect employment in the country, which is historically a major issue. PwC reports that the loss to the tourism sector might put more than 1,000 jobs in jeopardy.

The firm recommends that businesses take stock and prepare for significant disruptions this year, through strategies like creating overviews of key suppliers, developing contingency plans, and conducting scenario analysis, among others. That being said, the firm also points out that disruptions from epidemics are often temporary, and economies often bounce back in reasonable time.