Market Situation in South Africa due to the COVID-19 Outspread
This pandemic has significant implications for private businesses all around the globe, and South Africa is no exception. COVID-19 is causing a significant slowdown in world trade, disruption to the supply chains, and serious change in tourism flows. South African companies that have built their businesses based on the global trade network are being exposed to vulnerabilities and trade discrepancies.
The government is urging such companies to make contingency plans, consider the financial and legal implications, communicate, and conduct scenario analysis. Not just this, the South African government is taking additional measures to ensure that businesses are up and running in the post-coronavirus scenario.
The Current Situation
● Foreign investment in South Africa is almost non-existent.
● Following a downward trajectory due to underperformance by equities, investors are cashing out of interest-bearing and money market funds. This, in turn, has resulted in decreased demand for listed credit assets.
● Investors are selling their credit assets in order to leverage the lower equity price currently prevailing in the South African market.
The impact of COVID-19 outspread is affecting the South African economy, just like the rest of the globe. The key variables in terms of impact can be related to the severity of measures being implemented by the South African government.
Initiatives Taken by the South African Government
The government introduced unprecedented measures to assist the citizens in its fight against COVID-19, including a nationwide lockdown. As the lockdown was partially eased from 1st May 2020, economic activity has been returning to normal slowly. However, people remain highly sceptical of new investment or expansion opportunities. On 1st April 2020, the draft Disaster Management Tax Relief Bill, 2020, and the draft Disaster Management Tax Relief Administration Bill, 2020, were published. These bills were introduced to assist small and medium businesses with alleviating cash flow burdens caused due to the pandemic and lockdown. Several other packages and remunerations are being offered to support employers as well as employees of small and medium enterprises.
Get Ready for the Post-Pandemic Situation
Under such harsh circumstances, businesses are tussling to stay afloat, with the government doing everything in their power to preserve and maintain the growth of the economy. With these extraordinary measures such as the relief funds and packages, the economy will take an upward trend soon.
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