SA economy needs more policy certainty to make latest economic improvement sustainable and build investor confidence

Belinda Bantham -- Thu, 09/05/2019 - 08:42

SA economy needs more policy certainty to make latest economic improvement sustainable and build investor confidence

“The better-than-expected GDP figures in the second quarter of 2019 are good news for the economy, as this at least confirms that South Africa has avoided a 'technical recession' (two successive quarters of negative growth), after the bad growth performance of -3,2% in the first quarter.” 

This is according to Prof Raymond Parsons, a well-known economist and academic from the North-West University (NWU) Business School.

“However, the latest growth figures are nonetheless off a low base and include the once-off highly disruptive impact of Eskom load-shedding in that quarter. There remain no grounds for complacency about how growth will average out over 2019 as a whole, given continuing vulnerable factors,” he adds.

He says that according to the current economic trends, it is unlikely that the GDP will exceed 0,6% this year. 

“This remains far too low to meet South Africa's socio-economic challenges. It still emphasizes the need for the urgent implementation of pro-growth reforms, sooner rather than later. 

“To make the latest economic improvement sustainable and to move the economy to a higher growth path, will require much more policy certainty to boost investor confidence and job creation,” he adds.

According to Prof Parsons, the outcomes needed from the possible implementation of the Treasury’s latest growth strategy have therefore the potential to either enhance or reduce policy certainty.

“The growth plan, if broadly supported, could facilitate turning the economy around. It is now essential to provide the necessary leadership and to forge sufficient consensus on what needs to be done urgently to strengthen the South African economy.”