While government cannot control how financial markets respond to COVID-19, there is still a lot macroeconomic policymakers can do. The South African Reserve Bank can keep the wheels of the economy oiled amidst tighter financial conditions, which includes cutting the policy interest rate.
The current recession, mainly fuelled by Eskom loadshedding, has led to downward revisions of growth forecasts for the year ahead. While we have a reasonable handle on the impact of electricity outages on GDP growth, the same cannot be said for the spread of the coronavirus.
The past few National Budgets have been making investors increasingly miserable. And then Minister Mboweni surprised us with Budget 2020 – personal income tax relief and no increases in investment taxes - preparing the soil for economic growth.