PODCAST | Economic news of the week: local and global markets reflect panic

In this edition of Business Day Spotlight, we look at the economic news of the week and the effect of Covid-19 on global and local markets.

Host Mudiwa Gavaza is joined on the line by Dr Adrian Saville, CEO at Cannon Asset Managers and professor at the Gordon Institute of Business Science, to talk through the issues.

Listen to the discussion:

The coronavirus outbreak has resulted in a general business slowdown, as well as more people working and staying at home.

Saville begins by saying policymakers around the world have not done enough to ease the pressure brought on by the outbreak. Even as central banks cut rates — the US has cut interest rates to nothing — this might not be enough, he says. Fiscal stimulus, or injecting money into economies, is what governments should be doing, he explains. However, in some places, such as SA, the state may not have the resources to do so.

The full effect can only be assessed after some time, but the situation looks dire.

Saville says Cannon Asset Managers has revised its economic growth outlook for SA down to -0.8% for the year given the issues already faced by the country, which have been compounded by the effects of Covid-19.

The discussion ends with a focus on the local economy. Saville says the effect on businesses and certain sectors such as travel and hospitality has been devastating. He also points to the selloff on the JSE — with companies such as Capitec losing as much as 50% of its value during this time — as being indicative that businesses are under pressure.

Saville says he is worried about the implications of the general slowdown on consumers. The crisis began in the middle of the month at a time when many South Africans did not have a lot of money, while others could not earn as businesses shut down.

The conversation also looks the movement of capital globally, the weakening of the rand and how ratings agencies may factor the coronavirus into their country risk outlooks.

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• Business Day Spotlight is a MultimediaLIVE production.