Macroeconomic review and perspectives 1994-2018
The South African economy benefited from past policies designed to foster economic stability, but more recently it is suffering from structural blockages hindering competitiveness, corruption stemming from the Zuma Administration, and other political economy challenges.
• The South African economy is in a technical recession, largely the result of poor governance.
• The South African economy had benefited from earlier policies designed to foster economic stability, for example the GEAR program and the new monetary policy framework targeting inflation.
• As such, South Africa’s fiscal space improved dramatically, the CPI fell, and investment rates rose.
• But structural blockages are hindering competitiveness.
• Corruption and mismanagement became rife during the Zuma Administration, with the pillaging of SOEs the main instruments of state capture. Therefore, SOEs have been putting considerable pressure on state resources.
• Employment growth in the public sector has been higher than in the private sector, resulting in a sharp rise in the public sector wage bill.
• Low business confidence has hampered investment, while government revenue has suffered from the low growth environment and decline in tax morality.
• Debt-to-GDP rates are rising, while the country’s long-term foreign currency rating remains split.
• Bonds yields remain elevated, while FX volatility is the partially the result of political and policy uncertainty.
• Repo rates have been stable, but the deficit on the current account has persisted for years.
• South Africa’s key political challenges include structural unemployment, widespread poverty, systemic inequality, the unresolved land issue, an inefficient public sector and a pandemic loss of ethics in society at large.
Now read on...
Register to sample a report