Tag: monetary stimulus

Major central banks have combined with structural trends (slowing developed market population growth, globalisation, and technological innovation) to almost eradicate developed market inflation volatility over the past 50 years or so.

Will investment fundamentals return in 2021 or will the great disconnect of 2020 continue? As we enter 2021, the market’s recent bout of festive cheer will have left many investors feeling upbeat. However, do not allow yourself to be carried away by the market’s high spirits. While there are many reasons to feel positive about the year ahead, it is equally important to note what markets seem to have forgotten – namely that the pandemic and its consequences are not yet behind us.

The Covid-19 crisis has brought much of the world economy to a sudden stop. Millions upon millions of people are in lockdown across the world, preventing them from working, buying, producing and selling goods and services. Global and local supply chains are interrupted, and small and large companies see a collapse in income. Households are under similar pressure.

With severely limited fiscal space, planned economic reforms need to be fast-tracked. South Africa is in a grip of panic over the impact of the coronavirus disease 2019 (COVID-19). The situation prompted an extraordinary address to the nation by President Cyril Ramaphosa on the evening of March 15. Apart from very real human health concerns, he commented that the outlook for the local economy – already on a weak footing heading into 2020 – is a big headache. Economic growth forecasts have been cut over the past few weeks as forecasters realise that the impact of the pandemic will be larger than previously thought. This begs the question: how will local authorities respond?