South Africa’s road to recovery post Covid-19 likely to be a long one

Economists are speculating that global economic recovery may only truly begin in 2022 and possibly even 2023, says the writer. File Picture.

Economists are speculating that global economic recovery may only truly begin in 2022 and possibly even 2023, says the writer. File Picture.

Published Dec 24, 2020

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By Daniel Kibe

The year 2020 was a difficult year.

And even with a Covid-19 vaccine on the horizon in 2021, a return to a degree of normality is still probably a way off. Economists are speculating that global economic recovery may only truly begin in 2022 and possibly even 2023. With the vaccine being rolled out gradually and governments making decisions about who gets it first, there is still going to be physical distancing in place for most of the year ahead. Some countries will have better access to the vaccine than others.

In terms of which economic sectors will recover first, airlines and tourism, which were hardest hit by Covid-19, will probably be among the first to pick up the pieces. Entertainment and events will take longer as physical distancing continues.

Massive levels of unemployment around the world, due to thousands of small and medium businesses being forced to close their doors and larger businesses cutting costs drastically, is undoubtedly going to hamper economic recovery.

The potential outlook for emerging markets like South Africa is precarious at best. South Africa was already facing economic difficulty before the virus. Mismanagement and corruption, along with Eskom’s troubles, were serious sore points.

South Africa’s road to recovery is likely to be a long one.

For those trading in commodities in 2021, there are a few things to look out for. Oil is going to see a big shift over the next few years, with countries like the UK set to ban fossil fuel burning cars in 2030. Airlines, while on the road to recovery, are still unlikely to use as much fuel this year. Gold is generally a safe haven for investors.

Markets are set to move robustly in 2021. It’s a fascinating time in history. I think there is another “year unexpected” ahead in 2021 and it’s a tough one to call. Whatever happens, it’s an interesting time to be alive.

Daniel Kibe is the Co-founder of CM Trading.

The Star

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