#10things on why there is still hope for the SA economy
This is why there is still hope for the South African economy and growth, say these prominent economists from Unisa, Nedbank, BMR and Stellenbosch University.
News on the SA economy is pretty dire. The national shutdown last month by union federations, Cosatu and Saftu; as well as the release of the latest inflation figures, prompted the Bureau of Market Research in partnership with UNISA, to host a webinar with economists to find the light at the end of the tunnel (that is, provided Eskom hasn’t switched off the lights again).
The economists polled for the research presentation included economic advisor Dr Roelof Botha, Nedbank chief economist Nicola Weimar, and University of Stellenbosch Business School’s Dr Nthabiseng Moleko. The focus was on the current state of South Africa’s economy; key factors contributing to the “foggy economic climate”; and forecasts of the economic landscape in the near future. This webinar hosted by the Bureau of Market Research (BMR) was part of this year’s Economist of the Year competition.
The context included the unions call for urgent government intervention to help alleviate the dire economic situation which is impacting on the quality of life of most South Africans and increasing poverty. BMR stated in a release: “[It’s] a clear indication that South Africans have had enough and have lost faith in government’s economic policies. One of the primary concerns expressed by the unions is that while workers’ salaries have not shown much of an increase, consumer inflation has increased substantively, i.e., the CPI release by Statistics SA showed that annual consumer price inflation was 7.8% in July 2022, up from an already high 7.4% during June 2022.
“Despite the recent unemployment figures currently standing at 33.9% in the second quarter of the year, the 0.6% decline does little to quell the problem that most South African households are facing. The bottom line is that 8 million South Africans are currently unemployed. The BMR panellists and economists recommended these actions to fast-track economic growth and to re-instill hope:
1. There is a positive outlook for the economy: Nicola Weimar said that we can have a positive outlook and hold on to growth. From her perspective, the support for growth comes from continued consumer spending; and that it is evident that some life is returning to infrastructure.
2. There will be GDP growth this year: Government spending is making a small contribution towards GDP growth and Weimar predicts a GDP growth of 1.7% for this year, even though our economy has been negatively impacted by what is happening globally, like the Russian-Ukraine war.
3. Fixed investment activity will be positive: Weimar noted that it is expected that fixed investment activity will be positive, while government spending is making a small contribution towards GDP growth.
4. Government economic leadership is there: Dr Roelof Botha said: “Wrong economic policies can make or break a country as seen in countries like Venezuela; and that South Africa is currently still recovering from a decade of pathetic government and that of incompetent appointments in state-owned enterprises.” He did, however, express his optimism about the fact that he believes we currently have a president who understands economics, to turn the ship around from useless economic policies, to generate closer cooperation with the private sector.
5. There is a stable macro-economic policy framework: Dr Nthabiseng Moleko believes that South Africa is unique in that we have a stable macro-economic policy framework. “We do have a history of fiscal policy that is sustainable. We can argue whether this is expansionary sufficiently, and how we can ensure that the revenue generation is balanced, but also sustainable; and how better to use that allocation in terms of the functionality of the state and government.”
6. Growth could hit 2%: We must deal with the issue of growth, Dr Moleko said. “What is important are the drivers of the growth for our country, however, we have not seen sufficiently, for example, productivity from the side of business, amongst others. I also project growth being at around 2%. What is concerning though, are the high levels of the cost of living with wages not keeping up with inflation.
7. Fast-track investment growth now: Investment growth could be fast-tracked provided the energy crisis is resolved; and that loadshedding is ended so that adequate space is created for faster economic growth, said Weimar.
8. Reinvestment for productive sectors: Dr Moleko also strongly advocates for reinvestment in productive sectors, especially in marginalised provinces like the Eastern Cape, Mpumalanga, the Northern Cape, the North West Province and the Free State.
9. Drive transformative growth in the right sectors, to see economic growth too: With the right economic strategy, South Africa can become one of the fastest growing economies in the world – like many other African countries such as Ethiopia, Rwanda, DRC, etc, which were in a far worse position only a few decades ago (i.e., destroyed by war, famine, lacking skills and infrastructure, and without a solid macro-economic policy, and so on). This is the view of Dr Moleko, who says there is “absolutely” hope for the SA economy, because South Africa is one of the most advantageous economies in Africa and among other developing economies. We have the skills, infrastructure, proven fiscal policy, and so on, which sets us apart. With the right economic strategy, sub-sector development and strong focus on key growth drivers – like agriculture and manufacturing – we can improve poverty, unemployment and infrastructure growth, she said.
10. South Africans remain hopeful: Despite the seemingly overwhelming problems that South Africa faces – most of the professional, business audience that attended this BMR webinar were actually “feeling hopeful” about the economy. This was despite the long list of things that pose the greatest risk to South Africa’s economic performance (also recorded in a webinar poll on the day).
And that is all that matters – that South Africans still have hope and the will to rebuild after decades of corruption and a global pandemic. That hope is the spark that is needed to continue rebuilding – and to give others hope too.
WATCH: View the full BMR ‘Hope’ webinar
POLL: Hope vs Corruption (below)
Main image credit: Unsplash.com
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