We have recently pointed out in a special note that the effects of an extended (and still continuing) lockdown on the economy will be quite severe. Some 20% or more of GDP could be lost in 2020. Many businesses face permanent ruin and millions of people will join the ranks of the unemployed. Not only will this cause hardship, hunger and countless deaths due to malnutrition, poverty and disease, but crime rates may soar while government will face a fiscal debt trap of unimaginable proportions. Already politicians are hinting at forcing the Reserve Bank to fund the growing borrowing requirement of government (known as monetising the debt). This contradicts the constitution which guarantees an independent central bank and hyperinflation is bound to be the result, much like Zimbabwe.
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