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Quantifying financed emissions is a critical first step in building trust that financial institutions are integrating climate change concerns into their core business and that net zero pledges are being taken seriously.
Vulnerabilities prior to Covid19 meant that investor sentiment around South Africa (SA) was particularly fragile. The severity of the pandemic itself, further eroded investor sentiment, thereby weakening the rand and increasing market volatility. During this time, we saw the USDZAR trading at over R19/$. In recent weeks, however, the rand has gained substantial strength, and is now trading below R14/$. In this blog, we explore some of the reasons for the rands remarkable recovery. These include: 1) Dollar weakness on the back of global markets balancing US fiscal and monetary policy. 2) High real interest rates offered in SA, which continue to attract offshore investments and capital. 3) A historic current account surplus on the back of strong commodity prices; and 4) Stronger-than-expected tax revenue data easing growth concerns. With global risks such as rising US inflation at bay for now, the rand may continue to benefit. The rand may also find support from a continued commodities upswing which is supportive of the trade balance and growth. However, local risks remain. SA’s economic growth is still a source of concern for investors. SA still faces serious fiscal challenges, including large government debt and tricky negotiations around the public sector wage bill. Adding to this, the slow start to the COVID19 vaccination programme and the threat of a third Covid-19 wave could add downward pressure to overall investor sentiment. These real economy risks may limit future rand strength.
Statistics South Africa (Stats SA), the country’s official provider of national statistics, is tasked with producing reliable data on a regular basis. The COVID-19 pandemic, and the related lockdown measures, have caused a severe economic contraction in 2020, but have also resulted in confusion over the degree of the pain felt by the real economy in the second and third quarters of 2020. This note briefly unpacks the method employed by Stats SA to estimate the reported changes in GDP and unemployment to better understand how the statistics office has arrived at these GDP and employment numbers.
Modelling macroeconomic trends across many African countries is extremely challenging, given the lack of up-to-date data available for public use. This modelling challenge is exacerbated by the uncertainty surrounding the magnitude of the economic impact of COVID-19. Instead of not modelling with this limited data, I believe that there is room to model innovatively and responsibly by creating a hybrid forecasting model that relies on a mixture of yearly data and literature. This model suggests that, in the worst-case, South African real GDP will decline by as much as 8% in 2020, and roughly 1.2 million jobs will be shed. These estimates from this model fare well in comparison to more sophisticated forecast models, making them integral tools for development economists wanting to understand the trajectory of other African economies with limited data availability.
The COVID-19 pandemic is global, highly infectious, and deadly. The crisis is largely unprecedented, at least in living memory and most governments, including the South African government, have been caught woefully unprepared. South Africa is in a state of lockdown, which has already been extended once at the time of writing (21 April 2020). The South African response has been commendable, and the data seem to show that the lockdown has reduced the spread of the virus. This is a positive first step, and we should take heart from it, but it is hardly the end. The COVID-19 pandemic is a problem with many moving parts, and in a globalised world, South Africa cannot move them alone. What is next for South Africa?
COVID-19, better known as the coronavirus, is a highly infectious and deadly disease. It is spreading rapidly across the world, taking its toll on the global economy and leaving thousands dead. The pandemic has spread to South Africa, but what does this mean for the country? What can we expect from the virus going forward? Can we contain it and why should we try? By looking at the virus’ spread across the globe, we try to provide some answers.
“Income distribution dynamics and the macroeconomy have a very intimate link. This link is evident in many key macroeconomic indicators, especially when looking at how national production changes with changes in income distribution. As such, this blog tries to unpack the relationship between output and income distribution (measured by the labourer’s share of national income), and discusses its relevance to South Africa.”