Flash Briefing: SA won’t recover from Covid for at least 4 years – OECD; SARB governor protests school racism

  • South Africa has tightened up measures aimed at curbing the spread of Covid-19. President Cyril Ramaphosa has extended a night-time curfew, reducing business hours for bars and restaurants, and reducing the permissible size of public gatherings to contain the spread of the coronavirus after a surge in infections. A widely anticipated tightening of curbs on alcohol sales did not materialise. Ramaphosa said “Further restrictions are necessary to ensure health facilities are not overwhelmed and lives that can be saved are not lost.
  • South Africa, forecast to have one of the slowest economic recoveries in the world, is unlikely to recover before 2025, according to the to the Organisation for Economic Co-operation and Development. It blames slow vaccine rollout and low consumer spending.  Global economic growth is expected to reach 5.8% this year, with the United States, United Kingdom, India, and China outpacing this worldwide average.
  • When it comes to betting on higher borrowing costs in the developing world, some investors may be getting ahead of themselves. In markets from South Africa to Mexico and South Korea, traders are penciling in a faster pace of interest-rate hikes than what economists say is currently warranted based on the inflation outlook. “Almost all of them are overpricing tightening,” said Shamaila Khan, head of emerging-market debt at AllianceBernstein in New York, whose $4.7 billion high-yield bond fund has topped 86% of peers in the past year. in South Africa, where forward-rate agreements are pricing in a 70% probability of a 50-basis-point jump in six months, whereas Bloomberg’s monthly survey shows the rate staying unchanged until year-end.
  • South Africa’s central bank governor has entered the fray over pupil diversity at schools. Lesetja Kganyago joined a group of parents in an anti-racism protest at Cornwall Hill College, a private school attended by his daughter near Pretoria, the capital. “The school has got to consciously go out and look for Black teachers to give our children pride to actually look and know that there are Black people who are excelling in the education sphere,” Kganyago told broadcaster eNCA on Monday while at the protest. Reports of a lack of transformation at the school have spurred protests, as have allegations by Black students that they experienced discrimination. In a May 26 statement, the school said it was revisiting its hair policy, diversity training and the structure of its board. Cornwall Hill College charges annual fees of as much as R93,550 ($6,793), putting it out of the reach of most South Africans. In 2015 employed White South Africans on average earned three times more than Blacks with jobs.

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