BUSINESS DAY SPOTLIGHT
PODCAST | Economic news of the week: recession and Covid-19
With SA confirming its first case of coronavirus, the economic outlook looks even more bleak
Our host Mudiwa Gavaza is joined in studio by Sifiso Skenjana, chief economist and thought leadership executive at IQ Business.
Last year, the pace of economic activity in SA slowed to just 0.2% — the lowest level since the global financial crisis. According to Stats SA, the SA economy contracted by 1.4% in the fourth quarter of 2019, after a contraction of 0.8% (revised) in the third quarter, resulting in technical recession.
Skenjana starts off by explaining what a recession is, and how it affects the country, both internally and externally.
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He says the growth outlook for SA looks quite bleak at the moment, highlighting the disparity between government’s projects with those of international investors and other interested parties. For example, the year started out with government projecting 0.9% growth for the year, while ratings agency, Moody’s saw this at 0.7%, a more pessimistic view.
With the first case of coronavirus in SA being confirmed earlier this week by the department of health, the discussion then moves on to how the disease continues to weigh on local and global markets.
Skenjana says recent manufacturing statistics from China and SA show that the virus has already had a negative effecy on that sector. For SA, tourism will likely be affected as people choose to travel less, he says.
That said, the rand has had a slight recovery as investors have started seeing local bonds as being more attractive after the US had an emergency interest rate cut recently to alleviate the effects of Covid-19, which affected yields.
As the conversation concludes, Skenjana gives his economic outlook for the rest of 2020, imploring Eskom’s leadership to give a load-shedding schedule for the rest of the year, which will allow people and businesses to better plan their activities and investments.
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