Covid-19 again looms large over second-half economic and financial market prospects
Source: Sharon Wood, Business Maverick, 30 June 2020, photo credit: The Investopedia
The flare-up in coronavirus infections in South Africa, US, Brazil and Iran in late June looms large over the likelihood of further financial market gains and economic recovery prospects during the second half of the year. Global equity markets are already seen as having moved too far and too fast in the second quarter, which puts them at risk, and the South African bond market is vulnerable to any deterioration in the already dismal state of government finances.
The prospect of a second wave of infections has been top of the list of downside economic and financial risks for some time now. The problem is that the current pickup in infections in SA, the US, Brazil and Iran cannot be defined as a second wave when the first wave hasn’t even passed.
Financial markets voted with their feet last week at the end of what could have been a bumper quarter, if not for the coronavirus setback appearing during June. Stock market losses in the advanced economies and South Africa are still only in the single digits, having recovered more than 40% from the March bear market low.
Last week alone, though, the S&P 500 Index shed 3% as the most populated states in the US, Texas, Florida and California, saw steep increases in infection rates and no sign of this leveling off, let alone reducing.
The second quarter was a wild ride for the stock markets and economies and that looks set to continue. Already dire forecasts for growth this year could be even worse should the virus not be brought under control. Already the IMF has considerably lowered its global growth forecast for this year and next on the premise that there were worse than anticipated outcomes in the first half of this year and there is an expectation of more persistent social distancing into the second half of this year, which would be damaging to supply.
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The South African Pork Producers’ Organisation (SAPPO) coordinates industry interventions and collaboratively manages risks in the value chain to enable the sustainability and profitability of pork producers in South Africa.
