Post COVID-19, are there reasons to be optimistic about the South African Economy? - Daniel Staib, Senior Economist, Swiss Re Institute
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Post COVID-19, are there reasons to be optimistic
about the South African Economy?
Daniel Staib, Senior Economist, Swiss Re Institute
1
Choose one word which describes how you feel about the outlook for SA post COVID-19?
or or
Go to
Participate on
slido.com and scan the use the link
our word cloud
enter the code QR code provided in the
poll!
#SA2021 above MS Teams
chat
Daniel Staib, GERS | November 2020 2
3
COVID-19: The worst
is behind us, but no
return to normality
any time soon.
Daniel Staib, GERS | November 2020 4
The worst is behind us but normality is a long way ahead
…economic uncertainty will prevail until a vaccine is widely available
Daily cases per 100’000 … but remaining in the “sweet spot” is challenging
ZA
2
(4) (1)
12-Mar
Rt > 1
1.5
1-May
Rt
1-Jun
23-Mar
1
Rt < 1 21-Sep
17-Aug
Easing Tightening
(3) (2)
0.5
-30 -15 0 15 30 45 60
Change in lockdown severity
Note: 7-day moving-average; change in lockdown severity (w-o-w) is an index calculated using a combination of Google mobility data (congestion delay
index for China) and the Oxford university stringency index (SRI US lockdown index for US). Values available with a lag only. Last value: 29 October
Source: Swiss Re Institute, Google, Oxford University, EpiForecasts
Daniel Staib, GERS | November 2020 5
Closing back down? The Rt macro clock moves away from “sweet spot”
Signs of increasing Rt in many advanced economies pose downside risk to started recoveries
Infections are again rising in Europe … … controlling the 2nd wave remains paramount
entations 1.5
CH
(4) (1)
IT
DE EUZ
Rt > 1
CA G7 ES
FR
GB US CN
1.0
Rt
KR JP
BR ZA
IN
t
The economic lockdown has pushed South Africa’s economy off an already
crumbling cliff
South Africa had a very strict and long lockdown… … and the recovery is lagging behind
Note: Oxford stringency index, 7-day moving average Note: Capacity shortfall in % of GDP, 7-day moving average
Source: Swiss Re Institute, Oxford University Source: Swiss Re Institute, Google mobility
Daniel Staib, GERS | November 2020 7We are experiencing
the sharpest and
possibly the shortest
recession of our
lifetimes.
Daniel Staib, GERS | November 2020 8A very unusual global recession
The dynamics of this crisis are very different from previous crises episodes
More extreme dynamics than during Global Financial Crisis
Far worse Unprece- 10
global dented 8
recession
Quarterly GDP growth rate (yoy%)
speed of
than the 6
GFC
economic
contraction 4
Likely one 2
of the 0
shortest -2
-1.8
recessions
-4
Extra- -4.2
-6
ordinary
Services
degree of -8
sector -3 -2 -1 0 1 2 3 4
uncertainty
severely Years to and from the trough in GDP contraction
affected
Source: Swiss Re Institute
Daniel Staib, GERS | November 2020 9We expect the South African economy to regain some ground through next year…
…but the recovery beyond the immediate bounce-back will remain a tough uphill single trail
We expect GDP to bounce back next year… …but lost output will not be recovered for several years
115
South Africa real GDP index (2019=100)
Swiss Re Institute
2019 2020 2021 2022 110
Real GDP (% change)
US 2.3 -4.6 3.8 2.3 105
UK 1.5 -11.0 5.6 2.3
Germany 0.6 -5.5 4.7 2.5 100
Japan 0.7 -4.7 2.4 1.1
Africa 2.8 -2.9 2.0 3.6
South Africa 0.2 -8.9 5.0 1.6 95
90
1 2 3 4 5 6 7 8 9
Series1 Series2
Source: Swiss Re Institute
Daniel Staib, GERS | November 2020 10Are you more or less optimistic for the economic recovery of South Africa?
or or
Go to
Vote on our slido.com and scan the use the link
interactive poll! enter the code QR code provided in the
#SA2021 above MS Teams
chat
Daniel Staib, GERS | November 2020 11It is know what is needed to spur up growth, but the implementation of plans
requires a delicate balance of power:
If not now when then can it happen?
Contain
COVID and
cushion
economic
damage Infrastructure
ramp up
Improve
government
efficiency political
support
Structural
economic
reforms
Address
inequality and
poverty
Daniel Staib, GERS | November 2020 12Government debt
Source: South African Reserve Bank, Refinitiv
0.5
1.5
2.5
4.5
0
1
2
3
3.5
4
5
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Source: IHS-Markit
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Government debt and elevated country risk are two hurdles …
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Country risk rating (1-10 scale)
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Daniel Staib, GERS | November 2020
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13South Africa’s strong institutions
and its innovative corporate sector
will be key to achieve higher growth
path … infrastructure
increasing
economic
development
growth
… but structural economic reforms are crucial to
leverage private investments and start a Lower
Private sector
virtuous circle investments
government
debt burden
More
resources for
longer term
improvements
14Is your company planning to investing into the South African economy?
or or
Go to
Vote on our slido.com and scan the use the link
interactive poll! enter the code QR code provided in the
#SA2021 above MS Teams
chat
Daniel Staib, GERS | November 2020 15Key messages
Olga Tschekassin
Daniel| Staib,
July 2020
GERS| |Swiss
November
Re Institute
2020 16Key Messages
We are experiencing the sharpest and possibly the shortest recession of our lifetimes
The worst is behind us but no return to normality any time soon
Uncertainty to remain high until a vaccine is widely available
The SA economic recovery depends on the implementation of structural economic reforms
and infrastructure investments ….
… in order to enable and increase private sector investments
Daniel Staib, GERS | November 2020 17Any questions?
Daniel Staib, GERS | November 2020 18Thank you!
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19Daniel Staib, GERS | November 2020 20
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Daniel Staib, GERS | November 2020 21You can also read
