South Africa’s extreme efforts to contain the coronavirus pandemic, including the lockdown, have brought the country its worst economic downturn since the Great Depression of the 1930s, South African Reserve Bank governor Lesetja Kganyago said on Thursday.“We expect that ‘the great lockdown’ will cause output to contract by about 7% this year,” Kganyago said during a Wits School of Governance virtual lecture on Thursday.
According to the governor, “the last time a figure of that magnitude appears in our data is during the Great Depression in 1931, when output fell by 6.2%.”
Kganyago said the apex bank had responded flexibly, quickly and aggressively to the Covid-19 crisis by cutting the repurchase rate by 275 basis points during the lockdown, now listed in Level 3.
This stage of the lockdown has seen eight million workers return to work, and two million students return to their desks – but with the mandate to observe the Covid-19 protocols during their interactions.
“So far, these actions (lockdown and repo rate reductions) have improved market functioning and are supporting economic activity.
“However, the larger economic outlook remains uncertain. We are watching the data closely, and we are ready to act appropriately, in accordance with our mandate,” the top banker said.