Macroeconomics Webinar Explores the Impacts of COVID-19 on Financial Markets

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The implications of COVID-19 for global macroeconomics was the topic of discussion at the recent Zoom session hosted by the Macroeconomics Research Unit (MRU) which comprises of academics and postgraduate students whose mission is to advance and develop research in this field.

The virtual session saw presenters, School of Accounting, Economics and Finance academics Ms Rethabile Nhlapho and Mr Devon Windvogel share insights on how financial markets in the local and global economy have been affected by COVID-19.

Nhlapho said that it is alarming how the effects of the virus have shown themselves in the bond and commodities markets, which are always considered to be safe heavens.

‘During this time we have seen unprecedented shocks on equity bonds, foreign exchanges, and commodity markets, with brent crude markets being the most affected as a result of declining global demand. South Africa has also suffered a huge blow due to the downgrading of its sovereign rating to below investment grade which has put additional strain on domestic financial markets,’ explained Nhlapho.

Windvogel stressed that the lockdown has resulted in a supply shock that will destroy many enterprises and with them, jobs.

‘The problem is not COVID-19 itself but the lockdown’s impact on the financial sector. The lockdown is likely to deteriorate many industries and for most households it was the first experience of food shortages and hunger. The lack of trust in government might radicalise South African politics. Hence, the government should use this opportunity for rationalisation and give reasons for the policies that govern the country,’ he said.

Words: Thandiwe Jumo

Photographs: Supplied