South African Economy To Shrink By 10.3% With Room For Larger Interest Rate Cuts: Merrill Lynch BofA

THEBE MABANGA

AS SOUTH Africa prepares to move to Level 3 of its national Lockdown, its economy is likely to shrink by 10.3% in 2020 while there is room for a 100 basis point interest rate cut, according to a research note released by Merril Lynch Bank of America on Wednesday.

Merril Lynch BofA says its analysis points to a 10.3% contraction in 2020 and a recovery to 4.8% in 2021. 

This is revised from a 5.3% contraction this year followed by a recovery of 3.2% next year.  

If correct, the latest forecast means that at the start of 2022, economic activity would still be below 2019 levels.

“The economy is gradually reopening under capacity constraints. Moreover, the global growth fallout is expected to be worse than we previously estimated, weighing on exports,” the bank said in a development that is likely to be a blow to South Africa’s