Impact of COVID-19, South African financial markets, IMF International Monetary Fund, lockdown, financial crises, economic recession, equity market, bond market, foreign exchange, commodities market, credit spreads
A new type of corona virus first identified in December 2019 has swept across the globe infecting millions of people. The virus, scientifically known as COVID-19, has caused many governments to declare a national state of disaster and to implement nationwide lockdowns to prevent the spread of the disease. These decisions and the uncertainty surrounding the nature of the virus has had detrimental impacts on the global economy. In June 2020, the International Monetary Fund (IMF) predicted a 4.9 percent contraction in global GDP, marking this time as the worst economic downturn since the Great Depression (IMF, 2020). This worldwide economic distress is different to past financial crises in the sense that it was not caused by something structurally wrong with the economy. The economic recession was brought about by governments' decisions that halted economic activity (Kiersz et al, 2020). This paper will address the impact of COVID-19 on four main financial markets in South Africa, those being the equity, bond, foreign exchange, commodities markets.
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