The South African Reserve Bank (Sarb) on Tuesday said they expect the country’s gross domestic product (GDP) to contract by 6.1 percent owing to the COVID-19.
The Sarb governor Lesetja Kganyago said this on Tuesday while presenting the decision of the monetary policy committee.
He pointed out that the pandemic will have a major health and social impact and create uncertainty.
“With that in mind, the bank expects GDP in 2020 to contract by 6.1 percent, compared to the -0.2 percent expected just three weeks ago. GDP is expected to grow by 2.2 percent in 2021 and by 2.7 percent in 2022,” he said.
He said both the supply and demand effects of the lockdown reduce growth and deepen it in the short-term, as businesses stay shut for longer and households spend less.
Kganyago said, “This will likely also increase job losses, with further consequences for aggregate demand. The impacts will be particularly severe for small businesses and individuals with earnings in the informal sector.”
He said if some business could be opened it could create new jobs to service more needs under the lockdown.
The Sarb believed that if the global economy takes a rebound quickly the country would be positively affected.
Kganyago said, “The faster the global economy recovers from the crisis, as China appears to be gradually doing now, the more positive growth spillovers will strengthen for South Africa, including healthy price levels for commodity exports.” Enditem