Economist: SA must rethink stimulus package as it eases to level 1
Economist Duma Gqubule believes government will need to rethink its stimulus package if it is to rebuild the economy after the devastating Covid-19 pandemic.
The country is set to move to lockdown level 1 on Monday with international travel, eased curfews and larger gatherings all given the green light.
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“I think we have to have a rethink of this stimulus and we have to start from scratch again and develop a proper stimulus for the economy. A proper stimulus must address the immediate humanitarian crisis in the economy by providing a basic income to millions of South Africans who are affected by this crisis here,” says Gqubule.
A study conducted by the Organisation for Economic Co-operation and Development (OECD) predicts that the country’s economy will contract by 11.5% this year.
This is higher than any other OECD country.
“I think the first thing that the government has to realise is the scale of the economic collapse that our economy is facing,” says Gqubule.
“What the country needs is a huge fiscal and monetary stimulus. We need more interest rate decreases, we need the central bank to support the economy by buying government debt. We also need the government to have a proper stimulus into this economy because the current stimulus is not a proper stimulus and South Africans need to understand this.”
In April, President Cyril Ramaphosa announced a stimulus package of R500 billion to be injected into the economy.
