Why we do not need to panic!
Prescribed assets, the state of the South African economy and noise around nationalisation have all been hot topics over the past few months. With so much information out there it can be quite overwhelming. We came across three great articles which we feel puts this all into perspective and hopefully quells some of the panic that many have felt lately. Take a read below – we would welcome your thoughts and comments.
”In order to “collapse” the most diversified and influential economy on the African continent, one would obviously have to resort to some form of anarchy.”
When a fairly senior office-bearer of the ruling political party in South Africa advocates the “collapse” of the economy via a policy of nationalisation, it is difficult not to become somewhat alarmed.
Viewed objectively, however, there is nothing to fear. The official in question happens to be Mwandile Masina, the mayor of Ekurhuleni – the metro that houses OR Tambo International Airport and a vibrant commercial and industrial hub generally referred to as a potential “Aerotropolis”.
In order to “collapse” the most diversified and influential economy on the African continent, one would obviously have to resort to some form of anarchy. Fortunately, Mr Masina does not have the means at his disposal to conduct such an exercise – whether by Stalinist-style policies or by orchestrated violence. Read More
S.A. faces contraction in GDP, but silver linings linger
While the International Monetary Fund’s (IMF) latest World Economic Outlook last week suggested a contraction of 8% in South Africa’s economy in 2020, the current rates of recovery from government lockdowns on various sectors could see a contraction of as much as 10% in the country’s GDP this year.
With this being said, South Africa’s steady recovery from one of the most stringent lockdowns in the world (which has seen the economy currently running at around 80% of its pre-COVID capacity) should give some optimism for a rebound, according to Carmen Nel, economist and macro strategist at Matrix Fund Managers.
What to do with your money amid S.A. economic pessimism and the worry of prescribed assets
South African investors have had no shortage of challenges over the past decade. Going into 2020, we were all hopeful that this was going to be the year we would turn the proverbial ship around. Covid-19 and its associated challenges have, however, steered us into unchartered (and choppy) waters.
From a South African perspective, the economic shock came at a time when we were already under pressure. The impact of job losses and the lockdown will have a big impact on South Africa’s GDP growth.