Coronavirus threatens Global growth
LONDON - Analysts are rushing to quantify the fallout of an intensified coronavirus outbreak, and Oxford Economics believes the virus turning pandemic could wipe out $1.1 trillion – the equivalent of well over R16 trillion – from the world economy.
A spate of new coronavirus deaths in Italy, Iran, and South Korea fuelled new fears of a prolonged global outbreak on Monday. US stocks tumbled the most in two years as investors fled risk assets and piled into gold and government debt. Meanwhile, the JSE had one of its worst trading days in 20 years.
All eyes are now on the virus’ death toll outside of China, a key metric for predicting the outbreak’s future containment. While the rate of infection in China has slowed, new outbreaks in Asia and Europe could escalate coronavirus into a global pandemic.
Economists at Oxford Economics split their outlook toward the virus’ economic fallout into two scenarios. Their baseline assumes “a large but short-lived economic impact” focused in China, before the outbreak rises to the level of a pandemic. Global gross domestic product growth would slow by 0.2 percent from January to February before a quick upswing.
Should coronavirus become a pandemic contained within Asia, global gross domestic product growth in 2020 will fall 0.5 percent, or $400 billion (R6.1 trillion), below the firm’s baseline estimate, according to the note.
A slowdown in world trade and consumer spending would hit most severely during the first half of the year before a sharp recovery lasts through 2021.
The projected hit to global GDP nearly triples if infection rates spike around the globe, economists Adam Slater and Neil Walker wrote.
JOHANNESBURG – The South African government has proposed a review of the public service wage agreement for the year, saying it cannot afford the last leg of the three-year agreement. The plan, announced before Finance Minister Tito Mboweni’s 2020 Budget speech has angered the labour movement.
This is according to a statement issued on Tuesday night by the Public Servants Association, which represents more than 230, 000 state employees.
The PSA said Government approached labour in the Public Service Coordinating Bargaining Council with a request to review salary increases for the year, "thereby denying public servants already meagre cost-of-iving adjustments."
"Considering the current economic situation that is aggravated by rising electricity costs, petrol price increases, and a rise in the cost of most commodities, public servants simply cannot afford to sacrifice on a salary increase," the PSA said.
The Central Executive Committee of the Congress of South African Trade Unions (Cosatu) slammed the proposal, saying it viewed the action as a "direct attack on collective bargaining which will never be accepted."
If the review were "smuggled" into the Budget speech, it added, the CEC would "regard it as a declaration of war and there will be a parting of ways with government going forward."
"This irresponsible and blatant act of provocation will seriously destabilise the public service and we warn the government to abandon this idea and give workers what is due to them on April 1, 2020," it said in a statement.
"If the government attempts to smuggle this review in the budget speech, the CEC will regard it as a declaration of war and there will be parting of ways with government going forward."
According to the PSA statement, the proposal would see Clause 3.3 of the existing wage agreement amended. In terms of the clause in the original wage agreement dated back to 2018, staff would see increases at projected CPI, projected CPI + 0.5 percent, or projected CPI + 1percent, depending on their job grade.
The public sector wage bill has long been a subject of debate. National Treasury has said that growth in the public sector wage bill "needs to be addressed" to cut SA's growing debt burden. Yet an overhaul of public sector wages has proven elusive over the years.