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Despite negative effects of COVID-19, SA economy will bounce back - Kganyago

The reserve bank governor on Thursday announced a reduction in the repo rate of 100 basis points to 5.25%.

South African Reserve Bank (Sarb) Governor Lesetja Kganyago. Picture: @SAReserveBank/Twitter

JOHANNESBURG - South African Reserve Bank (Sarb) Governor Lesetja Kganyago said on Thursday that while the coronavirus (COVID-19) was taking its toll, the local economy was expected to bounce back.

Kganyago announced a reduction in the repo rate of 100 basis points to 5.25%.

The governor said the country’s economy needed a boost, saying globally economic growth had dropped dramatically and this included South Africa.

He said the rand had also taken a pounding this year.

“At this point, COVID-19 is likely to result in weaker demand for exports and domestic goods and services, but its impact on the economy could be partly offset by lower oil prices. We also expect disruptions to supply chains and to normal business operations. The Bank now expects the economy to contract by 0.2% in 2020. GDP growth is expected to rise to 1.0% in 2021 and to 1.6% in 2022,” Kganyago said.

The decrease in the repo rate is good news for those in debt, but pensioners with investments will be hard hit.