South Africa’s economic growth prospects keep diving

Country is stuck in its longest downward business cycle since 1945.
The International Monetary Fund is the latest key institution to slash its growth forecast for South Africa. Picture: Bloomberg

South Africa’s economic growth prospects keep going from bad to worse.

The International Monetary Fund is the latest key institution to slash its growth forecast for Africa’s most-industrialised economy, which may have fallen into its second recession in as many years. It now expects the economy to expand by 0.7% in 2019, half of what it estimated in January, and similar to forecasts by the South African Reserve Bank and Bloomberg Economics.

The economy shrank the most in a decade in the first quarter of this year as the nation suffered the worst power outages since 2008.

Read: Shock GDP figure undermines Ramaphosa’s economic reforms

The National Treasury, which forecast growth of 1.5% in the February budget, is expected to lower its prediction in the October mid-term budget. While the World Bank’s 1.1% estimate seems to be an outlier, it was published as part of its mid-year Global Economic Prospects outlook on the same day that Statistics South Africa released data showing a much bigger-than-expected contraction for the three months through March.

South Africa is stuck in its longest downward business cycle since 1945, data from the central bank showed in June.

© 2019 Bloomberg L.P.


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The chickens have come home to roost and the goose that laid the golden eggs is getting strangled.

With the compounded mix effect of BEE, brain drain (all races) and capital flight or strike, the decline gets accelerated.

Government thinks that it can be entrepreneurial but corruption eclipses everything. Nothing destroys economies and economic growth more than corruption.

and it will keep on diving as long as the president and ANC quibbles on the apartheid past…..and petty squibbles among each other!

Here’s what they don’t tell you at university: an economy runs on energy, pure and simple. It has no substitutes and no mitigating factors (an endowment of natural resources is great, but labour is just another form of energy, and capital is surplus energy stored from the past.)

So when your car runs out of petrol it doesn’t matter how skilled the driver is, or how much advanced tech there is in the motor,  you’ve still got to push it to the garage – an act which requires, you guessed it – more energy!

So where is South Africa in the energy stakes? We are oil importers and our coal production has peaked. Our ability to import oil cheaply and in quantity is hobbled by our weak currency and poor export prospects. The role of Eskom in all of this is massive. Its looting and mismanagement have resulted in electricity prices that are toxic to business and economic activity. Also toxic to investment is BEE and a raft of industry charters.
But as we have dug into this hole from we need to escape we now have the headwinds of climate change, a peaking global economy and a burgeoning local population, soon to be bolstered with another huge influx from Zimbabwe as that country melts down yet again.

Running the country is the ANC of looters and dreamers: a new smart city, a world class national health scheme, half the population surviving on grants, labour rules that would do any first world country proud, and bloated government payrolls everywhere. And the remedy they see for this is for the continued transformation of the economy, more BEE, and the developmental state where they basically run and control everything. Hardly appropriate when
State itself only runs monopolies, and even these are beyond its skill set.

And so government turns to its enemy of the state, the taxbase of the private sector to fund its excesses and save the day. The taxbase sees this coming and responds with emigration and capital flight. 

Something has to give. It should be the bloated payrolls, government monopolies, BEE and the crippling ideologies, but these are the sacred cows. And so we should brace ourselves for e-tolls, punitive taxes, and more business closures all round, followed by another round of tax increases, and more emigration of skilled people and capital flight. As the economy weakens the hand of the looters grows stronger and we are faced with the policies of populism and outright theft.

A failed state beckons. Not if, just when.

“Country is stuck in its longest downward business cycle since 1945” – Apartheid was introduced 3 years later in 1948. Drastic measures for desperate times e.g. land expropriation, nationalization. ANC must realize the status quo can simply not continue. If it does, an Arab Spring is likely, and the likely winners will be the EFF or the likes of Ace Magashule and Jacob Zuma. However, what is currently happening in South Africa is extremely positive in terms of bringing corruption to light. Yes, no prosecutions thus far, however, an SOE executive, PIC executive and a Minister of sorts must be scared of what is going on and thus will exercise caution when deciding whether to commit a crime of corruption or not. In the past, no corrupt crimes received no scrutiny. Can’t understand South Africans. We are more negative today than we were when Zuma and the Guptas was in control. Progress takes time and people have reason to be optimistic. However, in the words of Johan Rupert (The Stellenbosch Mafia – Book), someone as dangerous as David Mabuza is simply to close to power. The ANC must split, where the bad and the good separate paths. However, the Zuma’s, Magashule’s etc. know that outside the ANC they are nothing! Advice to Rhamaphosa, make tough decisions, listen to your finance minister, engage big business and be willing to make unpopular decisions. Remember, Mandela made unpopular decisions and people not only supported him but they respected him for it. The ANC must realise, they need Rhamaphosa more than Rhamaphosa needs the ANC.

but at what cost did Mandela make the unpopular decisions, Mandela is not a king or some kind of royalty. Today the name is more commercialized more than anything else. Mandela was charismatic more like Obama but nothing close to action. The struggles for freedom does not dictate the direction of a country. I am a scholar a taxpayer etc and I do not want to leave my generation with this mess. Instead of me complaining I want to fix Africa, however I can only fix it more bigger and better when I have the support of the rest. No matter what the west might think if we had a gentleman like Donald trump, Xi Ji Ping, Boris, Christine Lagarde,etc then surely SA would have been different. This is the age of radical egoism. Refer to Immanuel Kant and then understand why. Self interest nowhere on earth do we get anyone optimistic about SA. We have a few guys abroad wanting to invest here but the bigger picture is just to use SA as a entry towards the better africa. SA is suppose to be the most industrialized economy on the continent yet we cannot even implement the CFTA quickly and properly let alone allow Africans to travel visa free across Africa. We have had 25 years to fix this and guess what many other developing nations have surpassed us in their first 3-5 years of change and growth. we are still relying on the past and still digging up BS to make one superior towards the other. So I propose this as a scholar(I am an undergraduate in BA IR approaching my final year shortly). I would fix africa but I need the rest and support of those who share my vision then I can fiz Africa and once Africa is fixed exc SA I will then focus to fix things here. The need is bigger and potential is better outside SA into Africa, ask MTN, ask Sanlam, Standard Bank, nedbank, eco bank, shoprite etc these all have good african stories which our leaders could learn from these experts. The retail king Whitey Basson SA leaders should take a leaf from this man’s growth and vision.

Caused by the Big social ExpEriment since 1994.

Strange then, one read articles quoting that the JSE was one of the best performing world indices the past century….and argues it will continue (as if past performance is a guarantee for future performance).

SA simply HAS TO structurally decline long-term….otherwise SA will not be able to revert back to the “mean economic average” of the rest of African continent (of which SA is part of, demographically).

WHY would we be different? What makes our indigenous people MORE SPECIAL than the rest of their African compatriots in having a higher standard of living in SA?? (..for starters, look how overweight ‘the people’ are…)

yes, the big A definitely didn’t affect them…..blinkvet en gesond!

Even during Apartheid period, where SA’s evil regime was notoriously known to all African nation states and their citizens, many foreigners have chosen to enter SA to work and live here (…well knowing the despicable evils of Apartheid regime, and what problems they potentially let themselves in for).

I concluded that life on the African continent must’ve been worse than Apartheid itself(?) Otherwise it’s madness to enter SA during those times…especially as an African?

It’s like me saying “SA life is tough. My family is now planning to emigrate to a place with better prospects. We’ve decided to go to Venezuela (or Syria)” 😉

It will be stuck for a lot longer.

Put a bunch of under-educated ministers in a position of power and “hope” it works, IS NOT A STRATEGY! They keep recycling these losers from one portfolio to another and they ruin the new one as well. Sounds like good economic strategy, NOT !!!! What are these peoples’ qualifications?? Being a struggle hero does not come up on the C.V.????

“One cannot and must not try to erase the past merely because it does not fit the present.” Golda Meir Quote

End of comments.



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