The all-encompassing and wide-ranging 178-page diagnostics of the South African economy embedded in the report “Growth Through Inclusion in South Africa”, prepared by Ricardo Hausmann and his team from the Growth Laboratory at Harvard University, is a timely and relevant document.
The further slight decline in South Africa’s unemployment rate to 31,9% in the third quarter of 2023 is good news, and the fact that total employment is now back to its pre-pandemic levels is welcome.
By Mbali Skosana
Prof Raymond Parsons, economist from the North-West University (NWU) Business School, says in the face of pressing economic and fiscal challenges, the Medium-Term Budget Policy Statement (MTBPS) offered a realistic but vulnerable fiscal picture for South Africa.
In commenting on the MTBPS that was presented to Parliament on 1 November by Finance Minister Enoch Godongwana, Prof Parsons points out that several of the fiscal risks outlined in the main February Budget have materialised and were recognised by the minister.
“The foundations of the 2023 Medium-Term Budget Policy Statement (MTBPS) on 1 November need to be realistic and sound, given the additional fiscal and economic challenges it faces.”
Prof Raymond Parsons, economist at the North-West University (NWU) Business School, says the National Treasury has already warned of the tough decisions that will need to be made in the medium-term Budget.
In commenting on the latest South African Reserve Bank (SARB) monetary policy review, Prof Raymond Parsons, economist from the North-West University (NWU) Business School, says it is now more urgent than ever to implement growth-friendly policies and projects.
The SARB’s comprehensive monetary policy review confirmed that both global and domestic economic trends are likely to keep borrowing costs high for longer, perhaps well into 2024.
As was widely expected, the Monetary Policy Committee (MPC) again decided by a vote of three to two to continue to keep interest rates on hold, following a similar decision at the previous meeting of the MPC on 20 July.
Prof Raymond Parsons, economist from the North-West University (NWU), says this further “hawkish pause” outcome was the right decision by the MPC, taking into account the overall global and domestic factors at present shaping South Africa’s economic environment.
The better-than-expected gross domestic product (GDP) growth of 0,6% in the second quarter of 2023 is welcome news, as it has extended its gains for a second consecutive time.
Prof Raymond Parsons, economist from the North-West University (NWU) Business School, says this demonstrates a noteworthy degree of resilience in the economy. This has mainly been the outcome of more moderate Eskom blackouts in June compared with April and May, together with other mitigating factors that helped to generate better growth figures.
“The watershed 15th BRICS Summit that took place in Johannesburg had, to its credit, several runs on the scoreboard by the time it concluded last week.”
Prof Raymond Parsons, economist from the North-West University (NWU) Business School, says while the outcomes were inevitably a complex amalgam of politics, economics and business, the overall BRICS profile and agenda have been taken to the next level.
Good economic news is that the consumer price index (CPI) (headline inflation) for July has again shown a welcome declining tendency, reaching 4,7% from 5,4% in June.
Prof Raymond Parsons, economist from the North-West University (NWU), says this is not only a two-year low for the CPI but is also much better than market expectations.
“Core inflation further moderated to a ten-month low of 4,7% from 5,0% in June. The omens for the inflation outlook in South Africa look promising.”