Johann Els. Picture: PUXLEY MAKGATHO
Johann Els. Picture: PUXLEY MAKGATHO

In this edition of Business Day Spotlight we look at the possibility of the SA economy rebounding after the severe impact of Covid-19, in our economic news of the week.

Our host Mudiwa Gavaza is joined on the line by Johann Els, chief economist at Old Mutual Investment Group, to discuss the issues.

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The discussion starts with a look at the pressure on global markets, with the potential of a worldwide recession a definitely possibility.

Els says the duration of the crisis is uncertain as the medical fraternity is still trying to understand much about the disease. The full cost of the outbreak can only be determined when the threat is over and life returns to normal worldwide.

Despite the chaos caused by Covid-19, he does acknowledge that the government has taken strong decisive action in dealing with the crisis.

The lowering of interest rates and stimulus announced in the US and by local authorities such as the Reserve Bank are a step in the right direction but it is unlikely to be enough to stem the negative effects of the crisis, says Els.

He is however hopeful that when the crisis is over there will likely be a recovery as people get back to work and start buying items that are restricted, unavailable or perhaps not a priority now.

With global oil prices having fallen dramatically in recent weeks, a petrol price decrease is set to come into effect from next week in SA. Though many South Africans won’t be putting petrol in their cars due to the lockdown, Els says this is good for consumers as it will help with lowering input costs for many other goods and services.

Els expects local economic growth to be -2%.

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