We have a jobs problem and later today we’ll see just how big. In the second quarter of this year our unemployment rate hit a new record high to 34.4%, mostly because of the impact of the Covid-19 lockdown restrictions. Now economists expect the numbers to balloon due to that devastating eight days in July that crippled businesses in KwaZulu-Natal and Gauteng.
While Nedbank forecasts that lockdown and the July riots will be the most significant contributors to the latest unemployment numbers, analysts have also warned that the country’s worst year of load shedding on record will also have led to job cuts.
Adding to our job woes is the shock increase in the petrol price to over R20 a litre, with the Road Freight Association warning that the fuel price hike could result in people struggling to get to work on a daily basis.
And just as we started lifting our heads from our deepest economic contraction in almost 30 years, our recovery risks being derailed by the identification of omicron that prompted several countries to ban travel to and from South Africa right before our summer holiday season.
Economists at Rand Merchant Bank believe the travel bans will be a significant setback for South Africa’s already vulnerable tourism sector, which accounts for 1.5 million direct jobs. The sector was preparing for an influx of offshore visitors, armed with hard currency, over the festive season.
Economics Professor at Wits Business School Jannie Rossouw believes the only way for the government to overcome the persistent unemployment problem is to allow the private sector more space to invest in the economy and to increase economic activity. The National Treasury has predicted a robust 5.1% economic growth rate for the whole of this year.
Meanwhile, the world’s focus has turned to local scientists who have begun crucial work to assess how well Covid vaccines hold up against the omicron variant that has been detected in more than a dozen countries since we formally reported it last week. The doctor who first spotted the new Covid variant, Dr Angelique Coetzee, described the symptoms linked to the omicron variant as extremely mild, with symptoms varying for adults and children, and mostly among the unvaxxed.
Seems the best way to stay safe – along with all standard hand-washing, safe-distance, face-mask protocols – is to get the jab.
In the markets, the initial overreaction to the discovery of omicron and its possible impact on the US economic recovery is subsiding, with relative calm returning to markets. “Emerging market currencies have stabilised but remain on the back foot, with risk sentiment still negative and the dollar holding reasonably firm,” comments TreasuryONE. Although the local unit firmed from yesterday’s opening levels to close at R16.14 last night, it is trading in a narrow range and was last changing hands at R16.19/$. “We need to break back below R16.00 to see a more significant recovery to R15.80 in the short term,” says TreasuryONE.
Among commodities gold is up at $1,791, platinum up at $971 and palladium up at $1,807. Oil is on the backfoot with Brent trading at $73.90 a barrel. “The probability that OPEC+ will stick to current production numbers is likely to prevent any further weakness in oil price,” comments TreasuryONE.
Here’s a roundup of the world’s top and most interesting headlines:
SA Business
The best and worst banks in South Africa – according to customers – BusinessTech
Gordhan blasts lack of prosecutions around state capture – TechCentral
How much more you are paying for petrol in South Africa since the start of the year – BusinessTech
Global Business
Jerome Powell says omicron adds economic risks, inflation uncertainty – Bloomberg
New Twitter CEO in racism row on Day 1 – Times of India
(if you’ve missed it: Here’s the letter Jack Dorsey sent to Twitter employees announcing his resignation as CEO)
Musk stages Tesla call comeback to give product roadmap update – Bloomberg
Markets
JP Morgan sees Brent oil price ‘overshoot’ to $150 per barrel in 2023 – Sharecast
Asian markets mostly up as traders edge back after rout – AFP
Dollar down, near one-week low as omicron fears ease – Investing.com
Opinion/In-depth
The thorny issues of lockdowns, vaccine mandates and trust in government – Daily Maverick
Why South African political parties must find a balance between rural versus metro support – The Conversation
To rage or not to rage, that is the vaxxing question – Sunday Times Daily
Video
A look at omicron variant’s spread in South Africa – NBC News
David Shapiro on Omicron’s market-moving mania – Biznews
Thailand sees gradual tourism recovery – Reuters
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