A year ago we foresaw the prospect of the local economy recovering, albeit slowly, with Cyril Ramaphosa at the helm in South Africa. It seemed we might be in for a year of some optimism after the Zuma decade. Initiatives such as Eskom and the Zondo enquiry were being tackled at long last.
In March all that changed. The unknown future with the Coronavirus pandemic hammered stock markets worldwide and markets fell by a third from February to March. The economic fallout from lockdown was harsh and many businesses have not survived. Whole industries have been decimated and life has changed for countless people, now shopping and working from home.
In the northern hemisphere, summer promised some relief and return to normality for citizens, but resulted in aggressive spikes in infection growth. Cases continued to grow, surpassing 72 million infections and 1.6 million deaths at the time of writing this.
The unprecedented stimulus by governments worldwide helped many stock markets to recover the losses in the first quarter, South Africa included. The UK and some of Europe were not quite so lucky.
A sideshow to the pandemic was the US Presidential elections, with an irrational and unpredictable Trump opposing Biden. Following the experience of the USA over the past few years, Joe Biden will have the task of really Making America Great Again. China is in the wings, ready to take over the mantle if this does not happen. Rapidly increasing awareness of climate change issues should also get more attention under a democratic US government.
A challenging question is whether the South African Government has the courage to face up to the hard decisions and unpopular moves required for the country to recover towards prosperity.
The pandemic has been an opportunity to have some of the difficult conversations and make meaningful changes. The huge challenge of turning Eskom around has started positively, and there are positive signs with economic reform and hopefully a few long awaited corruption convictions. The news of a number of vaccines may just be the game changer we need, with vaccinations having started in the UK and US. We may find that six months from now the disease starts retreating as more people are protected. Will we lapse back into old habits, or will this be the start of a new normal?
We are not brave enough to make predictions of the future, but we do wish you the opportunity of enjoying the summer, and local holidays, even if this means observing the COVID-19 protocols while you’re doing so. Keep safe!
The Ascent Wealth Management team.