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Business Report writes that First National Bank (FNB) warned on Wednesday of a dire economic outlook for 2020 and predicted that gross domestic product (GDP) could contract by 8% due to the impact of Covid-19.
FNB senior economist Siphamandla Mkhwanazi said the pandemic had put the country at its worst level in decades, with nearly 800,000 jobs expected to be lost. Noting that Covid-19 had become a “reset” for the economy, with murky and volatile times ahead, Mkhwanazi stated: “We are probably going to see one of the deepest contractions in the GDP, the deepest we have had in history. In our view, it’s likely to range around negative 8 percent.” He added that with increasing deflationary pressure due to weak demand for products, the bank believed that inflation would average 3%. FNB foresaw a “partial recovery” in 2021/22, with GDP growth touching 5% but coming from a “very low base”. “We are likely to see massive job losses. We wouldn’t be surprised if they add up to at least 800,000 in the first round, and what comes after that will be dependent on how corporates and households react,” Mkhwanazi opined. FNB’s GDP forecast is worse than the SA Reserve Bank’s 7.1% and the IMF’s 5.8% contraction this year.
- Read the full original of the report in the above regard by Siphelele Dludla at Business Report
- Read too, Business confidence at rock bottom as economic activity tumbles on lockdown regulations, at Business Report
Get other news reports at the SA Labour News home page