Despite announcing that inflation would be moderate for 2020, the Reserve Bank has warned that the country’s economic outlook is expected to be poor due to the recent novel coronavirus (Covid-19) outbreak. GDP is expected to contract by 0.2% this year.
In a statement on Thursday, Reserve Bank governor Lesetja Kganyago said the coronavirus would have a severe and long-lasting impact on the country’s economic status and growth.
“A once-healthy economic growth outlook has been revised down sharply due to the outbreak and spread of Covid-19. This coronavirus will negatively affect global and domestic economic growth through the first half of 2020, and potentially longer depending on steps taken to limit its spread,” he said.
The outbreak of the virus has devastated the global economy and traditional supply chain networks, with global economic growth expected to be subdued this year at 1.1%. This, according to Kganyago, will trickle into the South African markets, with local supply chains set to be restricted as part of efforts to contain the spread of the virus.
“At this point, Covid-19 is likely to result in weaker demand for exports and domestic goods and services,” he said.
“We also expect disruptions to supply chains and to normal business operations. The bank now expects the economy to contract by 0.2% in 2020.”
However, although the country’s export market is expected to be hit relatively hard by the outbreak, Kganyago reassured the public that prices had remained high for certain export commodities. – Bjorn Vorster
