πŸ”’ Ex Lehman chair warns coronavirus economic hit is worse than 2008

As the coronavirus pandemic grinds on, the death toll is rising. But in many places, the economic toll is rising even faster. In this episode, featuring content from the Bloomberg Businessweek podcast, we take a look at the economic impact of the coronavirus and what governments around the world are doing about it. South Africa, with its high debt burden, low growth, and fragile households, may be particularly vulnerable to the economic shocks the pandemic is causing. – Felicity Duncan

The coronavirus pandemic has – at the time of writing – seen over 300,000 people infected and over 13,500 people killed. While the death toll and the suffering of those still fighting for their lives in hospitals around the world is terrible, more and more people are also grappling with economic pain.
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In a bid to slow the virus, governments worldwide have been shuttering schools, bars, restaurants, and theatres, and confining citizens to their homes. These measures may save lives, but they are simultaneously killing businesses – there have been waves of restaurant closures and dozens of airlines are on the brink of bankruptcy. As the virus attacks businesses – both large and small – more and more people are as fearful of the economic future as they are of the deadly virus.

South Africa is entering the pandemic in a weak economic state. Unemployment is high, the country’s debt-to-GDP level has been rising unsustainably, and many households are highly indebted – just one pay cheque away from disaster. With economists predicting a painful second quarter contraction, the government is doing what it can. The SARB cut rates by 100 basis points in recognition of the seriousness of the situation. Yet, with limited capacity to borrow, it’s not clear how much the SA government can do to ease the pain.