Budget deficit will reach world war levels, says SA Reserve Bank

The coronavirus outbreak and SA’s 21-day shutdown could mean the country is headed for an economic contraction of between 2% and 4% this year, and a ballooning budget deficit not seen since both world wars, the SA Reserve Bank said on Monday.

“More recent work suggests 2020 growth will be in a range of -2% to -4%, with downside risks should the lockdown be extended, or if the global economy weakens more than currently projected,” the Bank said.

“Monetary policy provides a boost to demand, but the reach of these measures is limited by weak economic fundamentals and the scale of the Covid-19 shock,” the Bank said.

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