Business expects Covid-19 impact to be worse than 2008 crisis

Four in ten businesses find it difficult to continue their operations.
The lockdown has increased survival uncertainty for numerous businesses, with some anticipating that the impact of Covid-19 will be hard to recover from. Image: Getty Images

Big or small, it is not uncommon for any business during this time to feel some uncertainty about its future, and especially its cashflow projections.

South Africa embarked on a national lockdown form March 27; just prior to that there was very little movement of people as fear of Covid-19 spread globally.

According to survey by Stats SA during the lockdown, four in ten businesses said they cannot continue to operate. A total of 707 businesses in the formal sector responded to the survey, outlining the pandemic’s impact on turnover, trading, workforce, imports and exports, purchases, prices, and business survival over the two-week period from March 30 to April 13 2020.

The respondents [on average] have a turnover of R2 million.

Source: StatsSA

When asked about financial resources, as in the graph above, 42.2% of respondents indicated that they are not confident that they have the financial resources to continue operating through the Covid-19 outbreak.

The survey also indicated that only 54% of businesses can continue without turnover between one to three months.

StatsSA notes that about half of the respondents have had to shut their doors, with the majority in construction, manufacturing, trade and mining sectors.

More than half (54.4%) of the respondents don’t expect their workforce size to change, while 36.8% expect it to decline.

“Businesses indicated that they have implemented a range of measures to cope with the impact of the pandemic on their workforce, including decreasing working hours (28.3% of respondents) and laying off staff in the short term (19.6% of respondents). Only about one in four businesses indicated that they had not taken any measures yet,” it adds.

Five in six businesses indicated that they experienced a drop-in turnover over the period.

StatsSA says 85.4% of respondents surveyed reported turnover below the normal range. “Respondents in the construction, real estate and other business services, and transport industries were the most affected by lower than expected turnover.”

A third of the businesses expect to feel a pinch in their businesses, “worse than the 2008/2009 recession”.

“Many businesses (65%) anticipate that the impact of the Covid-19 pandemic will substantially be worse than the 2008/09 global financial crisis. Only 4.3% of respondents indicated that the impact will or could be the same,” StatsSA says.



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…but “we’re saving lives” as the presidency puts it.

Should a SARS’ auditor asks you during audit to “explain reduction in business income for the 2020/21 tax year, compared to prior year”.

…you need to respond by “we were busy saving lives”, as SARS staff has no clue what is happening on ground zero.

Some commentators say that we have no previous example that can give us a clue of what the results of lockdown could be. This is not true. We had a very good experiment about the socio-economic implications of an economic shutdown in South Africa.

In 1856 the Xhosa prophet Nongqawuse advised her people to put the Xhosa economy in lockdown as part of an effort to curb the Imperial virus from spreading in the Eastern Cape. At that time, cattle and maize farming drove the Xhosa economy. Just like now, people listened to experts who justified their actions by using certain unproven models that depend on random and statistically unproven data. 400,000 cattle were slaughtered, the maize crop was destroyed and 40,000 Xhosa died of starvation. That was 80% of the population.

This time the virus is of Chinese origin, but the prophets use the same models and the same data to come to similar conclusions. They decide to put the economy in lockdown, kill business activity, destroy profitability, create unemployment, create a run on the banks and to print money in an effort to stop the Chinese virus from spreading.

The prophet Nongqawuse gave us a taste of things to come.

“There is nothing new in the world except the history you do not know.” – Harry Truman.

1. you are 100% correct!
2. I tell this story even before the lock down started.
3. But NOT to lock down takes a very brave man:

4. “People, we are at war, and many people are going to die”
5. “You all will be remembered as heroes”
6. “We will look after your family, financially and emotionally.”
7. “You will be buried in a marked grave, and will we always honor you”
8. “BUT … … … “

8. “BUT, we cannot close down the economy”
9. “We need to work, for our children’s sake,”
10. “And for all of you who will not die in this war”

I am sure we all heard this before … … …

That’s the exact analogy. We’re burning down the house to save lives.

Stage 4 of the lockdown seems to put about a third of the economy back on line and will last? How long?

Stages 3 and 2 are just marginally better.

Looks like a good year at least before we could get to stage 1, but that’s also completely uncertain.

There is no way that we can sustain any of this and the economy will crater and collapse.

And the lives and livelihoods we will lose from all of this will be epic.

Considering that this insanity is global except for Sweden, the meltdown will be everywhere.

Letting the virus spread unchecked is no great idea either, but we’re not looking for a sensible middle ground here

Surely taxi drivers are killing more people than this corona virus

In a month or thereabouts the virus has killed 60 persons in South Africa, which is quite insignificant relative to the average 1400 or so murders for the same period. How fortunate we are!

After nearly 4 weeks of lock down, only yesterday did the death toll from this alleged killer corona match the daily average murders in SA of 57!

If you bring up the fact of just how stupid this lock down is and completely futile in preventing the spread it is. You are immediately attacked as a capitalistic pig who only cares about money. The argument apparently being lives vs the economy, lives always should come first – IDIOTS!

It is not about this at all, when you crater an economy this badly, it is actually about LIVES vs LIVES. A healthy economy means a healthy community. The RSA economy has been forcibly drowned in a long drop. The MASS unemployment and MASS poverty that will and has been created from this. Will cause 50-100 times if not more the deaths that covid 19 could ever cause. I think it is quite conservative to say we will lose a few million people long before their time, due to poverty, hunger, disease, violence, crime and civil unrest, in the months and years to come.

What about the halted in SA and all over Africa – POLIO/ MEASLES and TB vaccinations to mention a few – where will this lead in the years to come.

New data is showing that covid 19 has an R naught of less than 1 – which means it will naturally die off – it is not 3-5 as propagated by the WHO (it is less lethal than flu as borne out by the fact that even the worst hit countries are not even close to 20% of the death tolls in their worst flu seasons in the last 60 years), i might ask again what is the ETA of the WAVE OF DEATHS (3,3 million to be exact) that is supposed to be eating Africa alive – yet we sit on just over 1000 deaths and 20,000 cases on a continent of 1.3 billion – I wonder if should ask for Neil Fergusons personal mobile number and email address so people can try and contact the primary engineer of this fraudulent lock down!? (One day and his voice mail will be saying you have 26 million missed calls and his inbox 97 million mails)

Experienced economists and financial academics postulating that this might be worst than 2008/2009, have actually not sat down and just looked at the basic facts all available in SA and around the world. Why were some American producers offering to pay YOU $40/ bbl last night to take their oil – yes. Because you cannot just close a well, it is a very technical process, especially high pressure and high yield wells. Some if shut down will never re-open – there is barely a ULCC or 2 of storage left on the globe yet OIL is spewing out of the ground with nowhere to go. This is front and centre the largest commercial market in the world, this is telling us what is in store for every other industry – with the few very notable exceptions. Prepare for the next violent move down in the stock market in the coming 2-4 weeks – when everyone starts to digest the real economic impacts globally of this lock down.

Every day new data comes out from highly respected institutions and medical academics – which show that as expected lock down makes no difference, when the virus is already well entrenched, the infection blue print is the same, from start, to acceleration to peak, plateau and drop off – SWEDEN with NO LOCK DOWN is pretty much tracking the infection rate of UK/ ITALY/ SPAIN/ FRANCE/ DENMARK/ GERMANY – against most of those countries SWEDEN on a per capita basis is actually better off in deaths and infections, but certainly is not much worst off ie lock down was totally unnecessary.

GDP down 20% in SA this year i believe will be optimistic. If the government “panics” again at month end and extends lock down further, then i do not even want to feed the models anymore. Job losses will be well over 2 million. There is an article elsewhere here today about property sales down 40% in Q1 2020 – before covid 19!

Psychology 101 humans in these environments start to resist and question authority in week 3-4. In week 4-5 protests and resistance start to emerge. In week 5-7 these grow in intensity and start to become very violent and then can spiral. There will be a temporary relief when the collective moronic global leadership, release us from our cages and stop playing God – but sorry too late. The above violent unrest will return when the permanence of what has happened and the hunger and no incomes start to sink in.

For once can South Africa not just have leaders that lead, not follow the WHO/ UN like lap dogs because it suits their ultimate agendas. If all they see are WILDLY EXAGGERATED APOCALYPTIC death scenarios on one side and the ministry of finance putting out only the most optimistic of economic numbers – no wonder we stay in lock down.

LIFT LOCK DOWN NOW – as for every life you think you are saving, believe me you are killing at least 20 more.

Business ain’t see nothing yet.

End of comments.




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