International report raises red flags
In the light of political and economic developments in South Africa in recent years, the further slippage from 62 to 67 out of 140 countries in the country's overall global competitiveness ranking is not unexpected.
This is according to renowned economist Prof Raymond Parsons from the North-West University’s (NWU’s) Business School.
He says the latest findings from the restructured and refined World Economic Forum (WEF) report for 2018/19 again raise several red flags about factors in South Africa's economic performance. These factors are having a serious negative impact on the country’s international competitiveness, with Mauritius (49th) retaining its top spot in Sub-Saharan Africa, again followed by South Africa.
“According to the latest WEF assessment the South African economy has continued to struggle with various issues. These include cooperation in labour-employer relations (at the number 136 spot), time to start a business (128), security (132) and health (125). The property rights ranking has also dropped from 56 to 97,” says Prof Parsons.
“On the other hand, the WEF also identified South Africa's strengths. Among these are large market size, good infrastructure and a well-developed financial system – positive pillars of competitiveness.”
He says the WEF survey again highlights that South Africa's 10-year average annual Gross Domestic Product growth has only been 1,7%.
“It is already widely accepted that South Africa has to break out of this 'low growth trap' if it is to better meet its socio-economic challenges. South Africa, therefore, needs to test its current policy initiatives and economic direction against these findings of the latest WEF survey. They need to find a way how best to strengthen its global competitiveness.”
Prof Parsons says the WEF assessment also serves as another useful background input to the agenda of the investment summit next week.
“It additionally resonates with the expectations around the medium-term budget policy statement or mini-budget' on 24 October, and what message it will convey about recovery and reform in the South African economy.”