A new year often ushers in newfound optimism, but this is in short supply. Once the Eskom fiasco is resolved, unemployment will take center stage as
The South African economy has been dealt a succession of blows at the start of 2020, with several leading companies in the country announcing their plans for thousands of job redundancies. This news could hardly come at a worse time for a South African financial system enduring a protracted downward slump, while Eskom's unreliable electrical supply has exacerbated existing economic problems.
Telecommunications giant
A new year often ushers in newfound optimism, but this is in short supply. While there is opposition to the proposed redundancies, with
The Eskom problem
Continued issues with the supply of electricity from major provider Eskom have also hindered
Eskom's struggles were expected to be resolved by the start of 2020, but problems have persisted. This has increased calls for
All of these factors have combined to influence the
This is troubling, given that
An important few months
International and domestic traders alike are cautiously observing the fate of the South African rand. The currency has naturally struggled under the weight of poor economic growth, while rising unemployment and diminishing electrical supplies won't do the rand any favors.
Markets are at something of an impasse ahead of the government's key budget announcement at the end of February. Moody's, the global credit agency, will then evaluate the robustness of the rand at the end of March. Furthermore, forex in
However, this may open up opportunities for forex traders to buy back at a favorable rate, with decisions by the
Interest rates and inflation
These cuts have been made possible by stubbornly low inflation. A rate of 3.7% in
Household spending accounts for over half of economic activity in the country, but growth in expenditure only reached 0.2% in Q3 of 2019. With rising unemployment subsequently lowering the average monthly income of South Africans, consumers have been unable to invest as much back into key markets.
The South African government faces the task of revitalizing the job markets in the country, as such a high unemployment rate is not compatible with a strong national fiscal performance. The government's February budget plans and the subsequent Moody's rating will give an indication as to what the future holds for the South African economy and its currency.
Most importantly, those employees at the mercy of potential cuts will hope that companies find a way to avoid such measures, or that the government swiftly introduces new measures to combat rising unemployment. Once the Eskom fiasco is resolved, unemployment will take center stage as
Copyright Global Africa Network. Distributed by AllAfrica Global Media (allAfrica.com)., source