News in South Africa 16th May:
1. Covid infections slowing:
While the national government is still reticent to say whether South Africa has entered into a fifth wave of Covid-19, senior researcher at the Council for Scientific and Industrial Research (CSIR), Dr Ridhwaan Suliman, says the country entered into the latest wave some three weeks ago, and may already be seeing new infections slow down.
Speaking to reporters, Suliman said that we are well into the fifth wave in South Africa, with tracked data points indicating that it started in April.
Based on previous waves, we know that we’re entering a new wave of infections when the number of new cases per 100,000 people exceeds five per day, and when the test positivity rate breached the 10% level, he said.
“We reached those levels at least three weeks ago. In fact, over the past week, we’ve seen a possible slowing down of infections, so we may potentially already be heading to the peak of this wave.”
Suliman said that South Africa is currently averaging just over 7,500 new cases per day. This number is still increasing, but the rate of increase is slowing.
The rise in infections may partly be due to increased gatherings over the April religious period and people, more generally, gathering more often, but it is also because of mutations in the virus itself, making it more infectious, the researcher said.
However, the good news is that people have built up immunity against the virus – either through acquired immunity via vaccine or through previous infection – and the number of infections is becoming increasingly decoupled from severe hospitalisations and death.
2. Massive petrol price hike:
Analysts have warned motorists to expect a massive petrol price increase next month.
This comes as government’s fuel levy kicks in again from next month.
Analysts have also warned that there is little that government can do to cushion society further as the increase would likely be driven by factors outside of its control.
Economist Dawie Roodt said that the end of government’s emergency fuel levy intervention would lead to consumers paying R1.50 more per litre of petrol.
He said that normal market forces were likely to push up the petrol price increase further.
“Based on information, about two days ago the petrol price would’ve increased by nearly R2 a litre in any event. So we’re talking about R2 plus R1.50 bringing it up to R3.50 that the increase is likely to be per litre of petrol in June,” said Roodt.
Economist Bonke Dumisa said that the petrol price hike would likely be followed by an increase in the consumer price index, making it more expensive to pay off home loans and other consumer products.
“This pushes up the food inflation as well and the food inflation affects mostly the poor people. So, things are really getting out of control economically,” Dumisa said.
3. Recession may be minor:
If you’re panicking over the possibility of a looming recession, don’t worry too much, because the next downturn likely won’t be anything like the Great Recession or the sharp slide during the early pandemic.
Wall Street giants like Deutsche Bank and Bank of America are projecting recessions starting next year on the grounds that there’s just no way for the Fed to fight inflation without slowing the economy to a halt.
But even if those predictions come to light, it’s probably not going to be that bad.
For the first time since the early 1990s, economists see the country on track for a fairly normal recession. That’s because, according to what experts stated, it will be more like a correction after a year of outsize spending throughout the economy. As people rein it in, the numbers will likely show a contracting economy for a few quarters, but the country won’t feel the pain of previous 21st-century downturns.
Though peoples’ demand for products seems insatiable, Susan Sterne, president and chief economist at Economic Analysis Associates, told Insider it doesn’t look like consumers are overextending themselves financially, as they did in 2008.
“I don’t think we are in such excesses that the consumer pulls back for an extended period of time,” she said, adding that continued spending should bring “some stability on the employment side.”
The coming downturn would also look dramatically different from the coronavirus recession. Daily Covid-19 infections, while up from levels seen earlier in 2022, are still leagues below the highs of the Delta and Omicron waves. Restrictions have been all but entirely reversed, and the summer travel season is in full swing. Today’s economy has much more in common with the pre-pandemic situation than that of early 2020.
“The type of recession we’re looking at is not like a serious, massive downturn in consumer spending across the board,” Brett Ryan, a senior US economist at Deutsche Bank, stated.
4. SARS deadline looms:
The deadline for the submission of up-to-date payroll information by employers on their employees is fast approaching, and non-compliance could cost them dearly.
The South African Revenue Service (Sars) has a powerful tool in the form of highly punitive administrative penalties to fight non-compliance in the timeous submission of tax returns and payments.
This year the annual reconciliation declaration (EMP501) submission period closes on May 31 and late submissions will attract a penalty equal to 1% of the year’s pay-as-you-earn (PAYE) tax liability. The penalty will increase each month by one percentage point up to 10% of the year’s PAYE liability.
According to a Sars spokesperson, the revenue service has seen a “definite” increase in compliance where penalties have been imposed. The fear of future penalties drives continued compliance.
There are in broad terms three types of penalties under the penalty regime:
- Fixed amount penalties,
- Percentage-based penalties, and
- Understatement penalties.
In the case of the late submission of a tax return, such as the employee declaration, Sars is entitled to levy a fixed amount.
The fixed amount ranges from R250 to R16 000 a month for taxpayers with annual taxable income of R250 00 and over R50 million respectively.
5. Loadshedding at stage 3:
Loadshedding is expected to stay for the rest of the week, heading up to Stage 3 on Monday and Tuesday, as power utility Eskom suffers further loss of generating capacity.
On Monday and Tuesday, at the same times, loadshedding will be implemented at Stage 3.
Thereafter loadshedding will be reduced to Stage 2 for the rest of the week.
Eskom says it will continue to closely monitor the system, and adjust and communicate any changes as may be necessary.
“Eskom appeals to all South Africans to help limit the impact of loadshedding by reducing the usage of electricity and to switch off all non-essential items.
“Eskom would like to remind the public that loadshedding is implemented only as a last resort to protect the national grid. We therefore urge all South Africans to continue using electricity sparingly especially between 05:00 and 09:00 in the mornings and 16:00 and 22:00 in the evenings.”
Last week, Eskom teams returned a generating unit to service at Kusile and Majuba power stations while a unit each at Camden and Kriel power stations were taken offline for repairs.