Business Day Sptolight
PODCAST | Economic news of the week: Unemployment is expected to spike amid mass retrenchments
Efficient Group’s Dawie Roodt says SA could be looking at 35% unemployment on the other side of the pandemic
In this edition of the Business Day Spotlight, we look at the economic news of the week as higher unemployment looms large in SA.
Our host Mudiwa Gavaza is joined by Dawie Roodt, chief economist at Efficient Group to explore the issues.
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The discussion starts off by looking at unemployment. Earlier in the week, petroleum giant BP said it plans to cut 10,000 jobs as the coronavirus pandemic accelerates the company’s move to slim down for the energy transition.
If a company of BP’s size and scope is making such cuts internationally, what could this mean for SA’s prospects?
Assuming a 10% contraction in the SA economy, Roodt says 2-million jobs could be cut locally given the depressed trading environment. That would translate to unemployment figures reaching 35%, which puts even more pressure on consumers and government’s financial resources to assist.
Roodt also gives his inflation outlook for the rest of the year, saying that inflation is no likely to go up significantly. On the one hand, supply has been negatively affected by lockdowns, which restricted the production of goods and services; on the other, many consumers have had their incomes reduced, which has decreased demand.
These factors work to reduce the risk of inflation, giving the SA Reserve Bank some room to possibly reduce interest rates further, but this will depend on how economic activity recovers, Roodt says.
The discussion also touches on how economists such as Roodt are keeping track of economic activity, how the lifting of lockdown restrictions is going, and the progress of the state’s response to the crisis.
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