Recovery from COVID-19 in South Africa

Type Conference Paper - Global Trade Analysis Project (GTAP) Conference April 15 2021
Title Recovery from COVID-19 in South Africa
Publication (Day/Month/Year) 2021
This paper is concerned with the recovery phase from the severely depressed levels of economic activity that occurred in April 2020 with a focus on measures to accelerate recovery in the short term. We first consider available information on economic performance during the pandemic. Overall, the recovery has been rapid but unbalanced. In most sectors, production has returned close to 2019 levels so has aggregate household spending. To analyse recovery, we model policy impacts over four quarters. Simulations combine Covid intervention polices combined with alternative financing options. All scenarios are run from the 4th Quarter of 2020 to the 3rd Quarter of 2021. The most aggressive option, funded by reduced government savings, adds 2% to GDP over the period of observation. Financing matters. If the most aggressive intervention is financed by raising taxes of the top decile, a 0.7% increase in GDP is achieved. All intervention plans are strongly progressive. Further, even in the most aggressive scenario financed by reduced government savings, the government debt to GDP ratio actually declines higher GDP and higher tax collections as a consequence of greater economic activity more than fully offset the increment to government debt.

Related studies