Economic recovery in progress amid COVID-19: Reserve Bank

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The South African Reserve Bank says economic recovery is in progress amid COVID-19.

However, says the bank, recovery is low in some sectors while others are already back to pre COVID-19 levels.

The Reserve Bank was virtually briefing Parliament’s Standing Committee on Finance on Thursday.

The Reserve Bank says sectors like mining, tourism, manufacturing, domestic vehicle sales and goods exports are starting from low point. However food and drink as well as fitness, healthcare, beauty and retail, sectors indicators are already back to pre-COVID-19 levels.

Reserve Bank Governor, Lesetja Kganyago says long-term damage will be on job losses. He says despite stimulus, South Africa’s economic recovery is expected to be relatively slow.

“2020 is the worst ever load shedding year despite the fact that we have had a weak economy. Blue bars show Stage 1 load shedding and you can see that it has been a terrible year in as far as electricity investment has been falling and with investment falling that affects our long run growth capacity. This means even growth capacity which means that even as we stimulate the economy the growth of economy to respond,” says Kganyago.

It also says it’s making steady progress in combating illicit financial flows. It is estimated that South Africa is losing billions of rands through illicit financial flows.

Deputy Reserve Bank Governor, Kuben Naidoo says the number of accounts frozen or forfeited has increased dramatically in the past five years – from 20 to 250 per year. He says one of the accounts runs into billions of rands.

“As an example of steady progress we are making,  five years ago when I came into this job we were freezing about 20 accounts a year to the value of about R30 to R50 million chair. Now we are freezing and forfeiting accounts about 200 – 300 a year there is one forfeiture that is running into billions but there’s been a dramatic improvement in our enforcement capability all of this in the government gazette,” says

The Reserve Bank says its response to COVID-19 is that the repo rate is now at its lowest level. It has cut interest rates by 300 basis point since the beginning of the year.

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