SA interest rate cut to record low, economy tanks, unemployment soars; Covid-19 to get much worse – SA govt; gold stocks

By Jackie Cameron

• South Africa’s central bank has cut its benchmark interest rate to a record low. That follows projections that the country will plunge even deeper into recession than expected after the government extended a nationwide lockdown in response to the coronavirus. The repurchase rate was reduced to 4.25% from 5.25%, the South African Reserve Bank said in an emailed statement Tuesday. The decision was unanimous, says Bloomberg.
• South Africa’s Monetary Policy Committee now sees the economy contracting by 6.1% – that’s a much worse scenario than the revised forecast of a negative 2-4% and the expected growth of barely over zero percent announced earlier this year. “Thousands of jobs have been lost and officials say it is difficult to estimate how many more will go as the Covid-19 containment plan takes its toll on the economy.”
• Hundreds of thousands of jobs are disappearing, with SA in lockdown. As Bloomberg reports, the official unemployment rate is 29%, but the rate according to the expanded definition, which includes people who have stopped looking for work, is almost 39%. Reserve Bank Governor Lesetja Kganyago is quoted as saying: “This will likely also increase job losses, with further consequences for aggregate demand.” The central bank is hoping for an improvement for next year, at this stage pencilling in economic growth forecasts for 2021 to 2.2% from 1% and for 2022 to 2.7% from 1.6%. It has lowered inflation projections.
• Professor Salim Abdool Karim, chair of the Ministerial Advisory Group, has warned that the Covid-19 pain is still to come for South Africa, because none of us have immunity from this deadly new virus. South Africa has reported less than 3 000 of the 2m Covid-19 cases worldwide and less than 330 of the more than 120k reported deaths around the world. But Professor Karim has warned that the pain is still to come. You can find Professor Karim’s full presentation and a video of the presentation, on BizNews.com. And, for more on Covid-19, be sure to download the daily Inside Covid-19 podcast with Alec Hogg, who shares the latest facts and analysis on the pandemic.
• Gold mining company stocks soared on Tuesday on the Johannesburg Stock Exchange.