The South African economy is feeling the impact of the coronavirus. Nedbank expects growth to have contracted by 1.5 percent in the first 3 months. And South Africa's recessionary conditions are expected to continue in the first quarter. Courtesy #DStv403
JOHANNESBURG - The Organisation for Economic Development and rating agency Moody’s have slashed global economic growth to just over two-percent this year.
In South Africa recessionary conditions are expected to continue in the first quarter.
The impact of the coronavirus is also being felt.
Nedbank expects growth to have contracted by 1.5-percent in the first 3 months.
Nedbank says it's too early to tell what the exact impact of the coronavirus will be in South Africa.
There are currently seven confirmed cases.
Trade data for January, which is the latest official trade data available for the moment, does not reflect the impact of the virus.
“If you look at motor vehicle exports they actually did quite alright in February which is the only indicator we have for February at this point…. We might see it starting to show up in the March numbers for manufacturing on the export side at this point we have calculated and adjusted our forecast for the first quarter of this year to reflect the impact of corona and we have a 17.5% decline on a quarterly basis in exports,” said Nedbank economist, Nicky Weimar.
Weimar says first-quarter growth is expected to show the domestic economy remained in recession in the three months to March.
South Africa has a few things going against it, such as weak consumer confidence and demand, as well as load-shedding.
Weimar adds the only hope is that the South African Reserve Bank will cut interest rates in March to provide relief for consumers and boost demand.
Rand and oil prices fell sharply in recent weeks - the rand was down nearly four-percent weaker in early trade, while the oil price saw a four-year low in a price war between Saudi Arabia and Russia.
The All Share Index was not spared - it was in the red at the start of the week.
Sasol is leading the declines with a 41-percent contraction after it was downgraded to junk status by Moody’s last week.