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We take a look at the number of liquidations and insolvencies reported by Statistics South Africa. The issue with the numbers is the fact that it doesnt reflect what is expected due to Covid-19 as less of these are processed by the court, while most are expecting these numbers to spike due to companies closing down as a results of Covid-19
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A short note regarding insolvencies by Statistics South Africa
The COVID-19 pandemic and lockdown regulations since 27 March 2020 have had an extensive impact on economic activity, including the work performed by the courts. Note that information on insolvencies is gathered from Notices of the Master of the High Court that appear in the Government Gazette. The estimated number of insolvencies decreased by 79,3% in May 2020 compared with May 2019. A 35,5% decrease was estimated in the first five months of 2020 compared with the first five months of 2019. Seasonally adjusted insolvencies increased by 455,6% (from 9 to 50 cases) in May 2020 compared with April 2020. This followed month-on-month changes of -95,0% in April 2020 and -22,0% in March 2020 –
Number of insolvencies in South Africa
A short note regarding liquidations by Statistics South Africa
The total number of liquidations decreased by 40,4% in the second quarter of 2020 compared with the second quarter of 2019. A year-on-year decrease of 17,8% was recorded in June 2020. The total number of liquidations decreased by 24,8% during the first six months of 2020 compared with the first six months of 2019
Number of insolvencies in South Africa
So sadly for economists and analysts hungry for data on how the Covid-19 is affecting the businesses in South Africa as the administrative data is affected by Covid-19 so once the courts starts processing these we expect to see a significant spike in the number of liquidations and insolvencies, but it will probably not show for the months it actually took place in. Even one of the biggest statistical released in South Africa, the consumer price index (CPI) is affected by the Covid-19 pandemic and numerous imputation methods are required to deal with the issues brought about by the Covid-19 pandemic.