We need economic growth to counterbalance any increase in net government borrowing when we are already stretched to the limit on debt and, as the finance minister has repeatedly pointed out, we need inclusive growth for the stability of the country.
In the face of what appears to be conflicting economic data, we spoke to Johann Els, a senior economist at Old Mutual to navigate the numbers and draw conclusions about what we should expect in the next 6–12 months.
The ugly
The biggest hit to the economy in the immediate aftermath of the Cabinet reshuffle was the damage to investor sentiment. “Kicked in the teeth,” was the way that organised business felt about the reshuffle, after a concerted effort by business, labour and Treasury to improve South Africa’s perception in the eyes of the international investment community after the fiasco surrounding the firing of Nhlanhla Nene.
Not all of this good work has been undone though, as can be seen in the way the rand has held up against major international currencies. But indicators like the business confidence index, which at 40 (ten points below 50) is indicative of contractionary tendencies in the economy, and shows domestic investors are still largely negative on prospects.
Not all of this good work has been undone though, as can be seen in the way the rand has held up against major international currencies. But indicators like the business confidence index, which at 40 (ten points below 50) is indicative of contractionary tendencies in the economy, and shows domestic investors are still largely negative on prospects.
