With the country in a Level 4 lockdown, business is very slow and many industries have yet to return to work. Although metals recyclers are operating, not much scrap is available. There are also calls for clarity from the International Trade Administration Commission (ITAC) over expired export permits during lockdown; at present, no such permits are being issued by ITAC.
Amid the continuing sharp increase in COVID-19 cases, the 2020 growth forecast for South Africa is -6.5%, with a fiscal deficit of 12% of GDP and a taxes shortfall of ZAR 70-80 billion. The government is providing ZAR 500 billion to support the economy through various programmes.
Unemployment is expected to rise to 33% and could go even higher over the next few months owing to COVID-19 and recession. Credit ratings are below investment grade while the central bank has cut interest rates by 200 points over the last two months, with the possibility of a further reduction this month of 50-100 points.
At the time of writing, the rand is trading at 18.50 to the US dollar and the outlook is weaker. Inflation is expected to drop to 3% going forward, mainly as a result of lower oil and petrol prices.
Non-Ferrous Metal Works (ZAF) (Pty) Ltd, Board Member of the BIR Non-Ferrous Metals Division