With 2020 being an economic “disaster” due to the Covid-19 pandemic, Transnet group CEO Portia Derby is not convinced 2021 will see a strong recovery in the global and South African economy unless a vaccine is discovered and administered on a mass scale worldwide.
Addressing a South African Transport Conference webinar on Wednesday, she remarked: “I’m not sure where the optimism for 2021 comes from … You can’t have such a deep crash in 2020 and suddenly think that things will be fine in 2021.”
Derby took over the hot seat as Group CEO of the ports, rail and pipelines state-owned entity in February, just weeks before the Covid-19 pandemic hit South Africa in March. She has kept a relatively low public profile since then, but the virus-linked lockdown and economic fallout is likely to have taken up most of her time.
She did not go into detail about the impact of the pandemic on Transnet’s financials, but her comments on economic prospects clearly highlight her expectation that 2021 is going to be a tough year for it.
“I think normality [will] start to arise when we have a vaccine … And, not just having the vaccine, but that the vaccine is being distributed for most of the world and most of the population is vaccinated,” she said.
Derby also noted that South Africa had been in an economic slump even before Covid-19 had hit.
“The real challenge now is that the drivers of consumption, the US, has 30 million of their population unemployed … The dampening of [US] consumption has a direct impact on Asia, because Asia then can’t work as much to supply the US. If Asia is not working as much, then raw material suppliers like Africa [are] also affected, meaning our growth opportunity is dampened,” she said, highlighting the interconnectedness of the world economy.
She said commodity prices have been negatively impacted by the Covid-19 fallout, but there has been an uptick recently.
“Stats SA and the BER [Bureau for Economic Research] assume South Africa can crash [in 2020] by as much as 9.5% … Bear in mind that when we started 2020, the economy was only going to grow by around 0.9%, which is barely growth,” Derby stressed.
“We must remember that, as South Africa, we are really ploughing from a very far place … to try to reverse the -9% [decline in GDP expected this year] and come up to faster [future] growth,” she said.
“That’s the reason why I am not sure how we end up with 3.1% [forecast GDP growth in 2021], when without Covid-19 we were expecting 0.9% growth this year.
“One must be hopeful I suppose, but hope is never a strategy,” she added.