Policy responses to COVID-19: what cards can South Africa afford to play?

With severely limited fiscal space, planned economic reforms need to be fast-tracked

South Africa is in a grip of panic over the impact of the coronavirus disease 2019 (COVID-19). The situation prompted an extraordinary address to the nation by President Cyril Ramaphosa on the evening of March 15. Apart from very real human health concerns, he commented that the outlook for the local economy – already on a weak footing heading into 2020 – is a big headache. Economic growth forecasts have been cut over the past few weeks as forecasters realise that the impact of the pandemic will be larger than previously thought. This begs the question: how will local authorities respond?

Policymakers around the world have in recent weeks been debating, coordinating, and implementing diverse policy responses to counter the negative effects of COVID-19 on their respective economies. Supply chain disruptions and reduced business activity are posing tremendous risks to economies large and small. Fears of its effects on the global economy have brought down stock prices and increased volatility in the financial markets to the highest on record - and many of the real-economy effects are yet to be felt.

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