Economy News Updates 2020
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Magashule says top ANC officials are due to discuss a more practical approach towards rebooting the economy
Pandemic and weak economy push smaller firms to quit bourse
As the Covid-19 pandemic continues to wreak havoc on South Africans, and the country's healthcare system and economy in its second wave, BusinessTech approached several of the top medical aid providers to understand how the coronavirus impacted membership in 2020.
The National Planning Commission has published a new report which focuses on the 'course correction' of South Africa's economy.
BMW aims to return to its pre-pandemic operating margin target as the global economy recovers, but big investments in electric cars mean the automaker will have to simplify its vehicle portfolio, its finance chief told Reuters
Despite South Africa having made significant strides in narrowing inequality in the last two decades, the country remains the worlds most unequal state. The findings are contained in a National Planning Commissions (NPC) report on the countrys Economic Progress towards the National Development Plan (NDP) Vision 2030. NPC Commissioner Mariam Altman represented the report during a webinar on Thursday. The report notes that while those living below the poverty line fell from 51% of the population in 2006 to 36.4% in 2011, this regressed to 40% in 2016. In this regard, social wages were playing an important role, but also a diminishing one. This will be addressed with rising employment, stronger service delivery and reduced cost of living. Asset poverty is deep. Central concerns are related to land redistribution, low-income housing, the deeds registry system, limited pension contributions and high indebtedness, notes the report. Altman said among contributors to poor performance was weak institutions and a lack of investment in people. We know that the economy is shrinking; it was falling even before COVID-19. There have been areas of good performance but the reality is that we are not moving at the pace we need to and we need to attend to those issues, she said. Investing in people Resilient institutions and an investment in people, she said, were critical differentiators between countries that progress and those that do not. The strength of institutions and investment is people are where we need a national discourse. These are the most important things that can be said about the economy. So this is an economic paper but the over-arching emphasis is on how we strengthen institutional delivery and how we strengthen the investment in people. It cant be overstated because we have been weak on these fronts, she said. Altman said South Africas challenge was that it escaped the clutches of apartheid where development was not delivered to a large population. [We] were building our institutions over the 2000s and unfortunately the character of state capture was that it destroyed state capability, she said. It was for this reason, she said, the document was largely focused on these areas. The essentials to square this transformation from high unemployment, marginalisation and poverty and inequality to that is inclusive requiresfinancial resources. These are huge transformative trends to transform infrastructure, to transform education over generations to do that is inclusive requires. The report concedes that while employment had grown between 2010 and 2019, NDP targets were still not met. During this period, 2.5 million jobs were created. Among the worrying trends was that by 2019, the employment shortfall was 1.5m - 60% of the target. This was anticipated to be much lower from 2020. According to the report, the country will not meet its 2030 NDP employment targets. COVID-19 will make it even harder, states the report. However, the NPC says it is still imperative to commit to full employment as the top priority even if the timing changes. Asset poverty Asset poverty is also in the abyss, with concerns largely centred on the slow land redistribution, low-income housing, the deeds registry system, limited pension contributions and high indebtedness. Altman and her colleagues in the report also indicate that the progress on inequality is too slow, with income inequality still rampant and worst in the world. In this regard, the report states that 90%-95% of wealth was concentrated in top decile, as compared to global average of 55-60%. About 5% of wealth is in the bottom 40% of the population, reads the report. The NPC in the report urges government to prioritise getting public finances under control. South Africa is said to be alreadywalking a macro-economic tight-rope, with low savings rates, poor export diversification and growth, and a small base of taxpayers. Structural improvements leading to a virtuous circle of growth should enable more space to use macro-policy as a stimulus. The economy is not yet on a footing that would respond sufficiently to macro-stimulus, so such actions would have inflationary impact, reads the report. NationalTreasury has indicated that macro-projections are uncertain,mainly due to domestic risks. The NPC warns that this deeply undermines the ability of creditors and businesses to make investment decisions in SA. It undermines certainty in sustained spending for service delivery and social protection needed for structural change, reads the report. Financially sustainable pathway The NPC says a financially sustainable pathway would be critical to the significant redistribution and transformation agenda for decades to come. These
The world's second-largest economy is grappling with a rise in infection rates, and a cautious tone prevails on Asian markets
Western Cape premier Alan Winde is offering suggestions how to allow for a controlled reopening of the economy under Covid-19 regulations, including a limited resumption of the sale of alcohol.
The Monetary Policy Committee has decided to keep the repo rate unchanged at 3.5% per annum, Reserve Bank Governor, Lesetja Kganyago, has announced. Speaking during a virtual media briefing on Thursday, Kganyago said during the MPC meeting, two members of the committee preferred a 25 basis point cut and three preferred to hold rates at the current level. In the third quarter of 2020, the South African economy grew by 66.1% quarter on quarter, seasonally adjusted and annualised, compared to the Banks expected 50.3% growth. The growth rate for the full year is now expected to be -7.1%, compared to the contraction of 8.0% expected at the time of the November meeting. However, our projection for the 4th quarter of 2020 is expected to be lower than previously forecast. And while lockdown restrictions currently in place are considerably less restrictive than in 2020, we expect growth in the first quarter of 2021 to remain muted, said the Governor. He said the Gross Domestic Product (GDP) is now expected to grow by 3.6% in 2021 and by 2.4% in 2022; GDP growth of 2.5% is expected in 2023. Kganyago said the meeting of the MPC took place at a time when the second wave of COVID-19 infections had peaked in South Africa and in many other countries. It is expected that these waves of infection will continue until vaccine distribution is widespread and populations develop sufficient immunity to curb virus transmission. Although the virus will continue in new waves, the rollout of vaccines is expected to boost global growth prospects generally. We have therefore revised global growth for 2021 higher. However, global distribution of vaccines is likely to be slow, creating an uneven pace of global economic recovery in 2021. The International Monetary Fund (IMF) had forecast global GDP to have contracted by about 4.4% in 2020 and to expand by 5.2% in 2021. The Governor said their new forecasts will be released on 26 January 2021.