Streaming issues? Report here
CapeTalk logo 2017 1500 x 1500 CapeTalk logo 2017 1500 x 1500
Best of Talk
00:00 - 03:00
volume_up
volume_mute

Up Next: Weekend Early
See full line-up
Best of Talk
00:00 - 03:00
Home
arrow_forward
Business

'SA not going to have a recession, but a fundamental depression'

30 March 2020 7:36 PM
Tags:
Economy
COVID-19
SA 21-day lockdown
Economic depression
Moody's downgrade

Busa's Martin Kingston, Standard Bank Chief Economist Goolam Ballim and Rand Merchant Bank market strategist John Cairns weigh in.

Moody’s downgrade of South Africa to full sub-investment grade rating together with the impact on the economy of the Covid-19 lockdown will have dire consequences for South Africa.

Bruce Whitfield speaks to Busa deputy president Martin Kingston about the country heading for what he told Business Maverick in a recent interview, is a structural depression.

Things are very bad both from a societal view, but also from an economic point of view.

Martin Kingston, Vice President - Business Unity SA

Kingston says from health care to assisting the most vulnerable, South Africa faces a crisis.

We're particularly concerned about the townships and informal settlements and the stress it is going to place on the health care system.

Martin Kingston, Vice President - Business Unity SA

The need to contain movement and observe social distancing is crucial, he says.

The more we do that the more hopeful we are that we will come out of this as quickly as possible.

Martin Kingston, Vice President - Business Unity SA

The reality is we were already in a recession and that was before Covid-19 descended on South Africa. Not just domestic impact but against an appalling global background with appalling catastrophic ramifications for Africa and potentially South Africa.

Martin Kingston, Vice President - Business Unity SA

Even though there has been preparation for this inevitable downgrade, he says the short-term and medium-term outlook is bleak and together with the impact of the virus, it will take a long time to rebuild the economy, he says.

Certainly, we anticipate there is not going to be a recession. There is going to be a fundamental depression.

Martin Kingston, Vice President - Business Unity SA

We are going to have a stepdown in economic activity obviously exacerbated by the lockdown which was a necessary step, and it is going to take time to recover.

Martin Kingston, Vice President - Business Unity SA

In doing so we are going to have to be much more flexible about the structural reform that we implement and the speed and agility with which we do so.

Martin Kingston, Vice President - Business Unity SA

He believes we are heading into a deep structural depression.

I believe we are now looking at negative numbers.

Martin Kingston, Vice President - Business Unity SA

He says many people will lose jobs and join the already enormous number of unemployed.

We don't see a U-shaped or V-shaped recovery but a more L-shaped recovery which is going to take an extended period of time.

Martin Kingston, Vice President - Business Unity SA

Group Chief Economist at Standard Bank Goolim Ballim agrees but says it will occur with relative brevity.

The economy will bottom and then in a grinding way will begin to recover. So it might have the makings of an L-shaped profile and may have the makings of a U-shaped profile

Goolam Ballim, Group Chief Economist - Standard Bank 

This is unprecedented.

Goolam Ballim, Group Chief Economist - Standard Bank 

Ballim says it will surpass even the previous economic recessions of 2008 and 2009.

South Africa's rebuilding and recalibration episode will have two installments to it.

Goolam Ballim, Group Chief Economist - Standard Bank 

One is institutional reform which has begun to happen over the past two years but the second is macroeconomic reforms.

There the Presidency has been much more guarded with seemingly holy cows which are untouchable.

Goolam Ballim, Group Chief Economist - Standard Bank 

There is a need for collective sacrifice and I think we are going to see salary sacrifices among a big swathe of white-collar workers.

Goolam Ballim, Group Chief Economist - Standard Bank 

The public sector just cannot be clinging to the type of contractual agreements in terms of wage settlements that have been familiar with.

Goolam Ballim, Group Chief Economist - Standard Bank 

He says there will be strategies and tactics borrowed from the 2009 and 2009 economic crisis to develop a raft of measures to assist.

The South African financial system is so much more fortified than it was 10 years ago.

Goolam Ballim, Group Chief Economist - Standard Bank 

Rand Merchant Bank market strategist John Cairns says local market reaction has not been that bad.

Listen to all the analysis below:

Subscribe to our Business Wrap Newsletter


This article first appeared on 702 : 'SA not going to have a recession, but a fundamental depression'


30 March 2020 7:36 PM
Tags:
Economy
COVID-19
SA 21-day lockdown
Economic depression
Moody's downgrade

Recommended

More from Covid-19 coronavirus explained

Waterfront-Cape-Town-wheel-tourism-123rf

DA to present plan to save tourism, a larger employer than mining or agriculture

5 June 2020 3:08 PM

Millions of people in South Africa’s livelihoods depend on tourism, says Manny De Freitas (DA Shadow Minister for Tourism).

Share this:
Read More arrow_forward

premier-winde-and-president-ramaphosajpg

[VIDEOS & PICS] Ramaphosa visits W Cape 'Hospital of Hope' at CTICC

5 June 2020 12:47 PM

The Western Cape has 76% of all Covid-19 deaths in South Africa as the president visits the field hospital set up at the CTICC.

Share this:
Read More arrow_forward

Death swing grieving grief 123rf 123rflifestyle

Covid-19 overtakes malaria to become the world’s leading cause of death

5 June 2020 12:18 PM

At the end of 2019, few people even suspected Covid-19 existed. Today it kills more people than any other cause.

Share this:
Read More arrow_forward

180806taxis

What W Cape govt is doing to ensure taxis are Covid-19 safety compliant

5 June 2020 11:46 AM

Transport and Public Works MEC at Western Cape Bonginkosi Madikizela says some taxi drivers are encouragingly compliant.

Share this:
Read More arrow_forward

Ventilator hospital icu intensive care 123rf 123rflifestyle

Eastern Cape healthcare system is starting to fall over as infections take off

5 June 2020 10:35 AM

"Our health system has never been as healthy [as that of the Western Cape]," says Estelle Ellis. "We’re not OK. I’m worried."

Share this:
Read More arrow_forward

Rat rodents in home 123rf

'Lockdown has seen a huge increase in rodent activity'

5 June 2020 10:29 AM

Pest Free SA says its a consequence of more people being at home with more food scraps and fewer people in the commercial space.

Share this:
Read More arrow_forward

premier-alan-winde-wearing-face-maskjpg

Premier concedes that new testing plan will affect Western Cape's Covid-19 stats

4 June 2020 6:28 PM

Premier Alan Winde agrees that the new restrictions placed on Covid-19 testing will make the province's infection data unreliable.

Share this:
Read More arrow_forward

robjpg

[LISTEN] Did my father really die from Covid-19 asks SA radio host

4 June 2020 5:42 PM

Former KFM DJ Rob Vember speaks to John Maytham about the events leading up to his father's death last Friday evening.

Share this:
Read More arrow_forward

Cyril Ramaphosa

How government's lack of transparency has fueled mistrust during Covid-19 crisis

4 June 2020 4:46 PM

Not sharing information with the public is unhelpful and lacks foresight says activist and writer Koketso Moeti.

Share this:
Read More arrow_forward

office-desk-work-space-workplace-employee-Covid-19-safety-disinfectant-123rf

Your employer isn't Covid-compliant, can you refuse to go to work?

4 June 2020 3:08 PM

Despite millions of people returning to work this week, the labour department says only 55% of companies are Covid-compliant.

Share this:
Read More arrow_forward