Lesetja Kganyago: The South African Reserve Bank, the coronavirus shock, and "the age of magic money"

Lecture by Mr Lesetja Kganyago, Governor of the South African Reserve Bank, at the Wits School of Governance, Johannesburg, 18 June 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good afternoon

It is now clear that the COVID-19 outbreak will produce the worst economic downturn in a century. We expect that 'the great lockdown' will cause output to contract by about 7% this year. The last time a figure of that magnitude appears in our data is 1931, during the Great Depression, when output fell by 6.2%. It had declined by 6.1% in 1930.

The South African Reserve Bank (SARB) has responded flexibly, quickly and aggressively to this crisis. So far, these actions have improved market functioning, and are supporting economic activity. However, the larger economic outlook remains uncertain. We are watching the data closely, and we are ready to act as appropriate, in accordance with our mandate.