Reserve Bank: South Africa Faces Negative Economic Outlook 2020

By April 10, 2020No Comments

In the midst of the Coronavirus Pandemic sweeping the globe, South Africa’s economy is predicted to contract by 2% to 4% this year as the government tries to curb the spread of Coronavirus, according to the Reserve Bank.

In the Reserve Bank’s six-monthly Monetary Policy Review, the 21-day nationwide lock down aimed at slowing the spread of the pandemic will reduce the rate of change in GDP for this year by 2.6%. The monetary policy committee previously projected in March that the economy would contract by 0.2%, but that was before the lock down was announced.

South Africa’s economy is stuck in its longest downward cycle since World War 2, with rolling blackouts and poor business and consumer sentiment weighing on economic growth. Uncertainty and downward shocks to economic prospects posed by the Coronavirus mark “an inauspicious start to a new decade after the serial disappointments of the 2010s”, the central bank said.

The past decade was the worst for South African economic growth, with total output expanding by only 15.9% between the first quarter of 2010 and the final quarter of 2019, compared to 18.9% and 16.7% in the 1980s and 1990s, central bank data shows.

Budget Deficit at Wartime Levels

The Coronavirus crisis could push the budget deficit to wartime levels by draining revenue and potentially increasing spending requirements if the lock down doesn’t effectively contain the rate of infections, the central bank reported. The shortfall could exceed 10% of GDP this fiscal year, it said.

The largest shortfall on record was 11.6% of GDP in 1914, followed by 10.4% in 1940, according to the central bank. National Treasury projected a gap of 6.8% for 2020/2021.

This grim outlook further reinforces the case for foreign investors to invest in the United States using the EB-5 program as a means of asset protection. It is advantageous for foreign investors to capitalize on this opportunity and invest in one of the most secure government programs available: the EB-5 visa program. In addition to placing their investment funds in a project, investors will also (upon approval) receive a green card and the ability to become citizens of the United states, along with their spouses and any children under 21.

Although every investor or investor family has their own motivations for moving to the United States, the EB-5 program has been an incredibly popular program over the last 10 years because it allows every investor to customize a life and future in America that fits their needs and dreams for their family. Now, due to the unfolding economic crisis surrounding COVID-19, the economic impact of this investment has never been more evident.

3 Key Benefits of the EB-5 Visa Program

  • EB-5 Investors receive an expedited green card that allows them and their dependent children under the age of 21 to immigrate to America with very few limitations or obligations.
  • The U.S. government is protective of EB-5 investors and their funds, as the U.S. economy receives a boost in foreign direct investment which will be translated into employment for newly created or saved jobs.
  • Developers receive discounted capital to deploy in their projects, incentivizing their creation of EB-5 funded projects.

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