Tough year ahead, say business leaders
WITH South Africa’s gross domestic product estimated to be below 2percent this year, business leaders agree a tough year lies ahead as they deal with a constrained economy.
Sizwe Ngqame, chairman of the Black Business Chamber, said this year would be difficult for emerging black economic empowerment companies, although next year was set to yield positive results.
“The reason is the South African and international political atmosphere and local, national and international corporate entities are sceptical of investing in South Africa. The solution is to invest more in emerging SMMEs (small, medium and macro enterprises), in kind and monetary.”
Janine Myburgh, president of the Cape Chamber of Commerce and Industry, said: “Business in the Western Cape faces a challenging year, but I am convinced our managers and entrepreneurs are up to the task. Our weak rand is actually an advantage in our thriving tourism industry, so perhaps the picture is brighter in the Western Cape than in other parts of the country.”
Myburgh added that, on the other hand, agriculture and agricultural products were a vital part of our economy and it would be some time before the sector saw things returning to normal after the drought.
Dr Yudhvir Seetharam, the head of analytics at FNB, said this year would be a trying for small and medium enterprises across all industries, “but with a recovering world market, and a rand that is finding strength, we should start to see an upward trend towards the end of 2017, hopefully the worst is behind us.”
Momentum Investment’s economist Sanisha Packirisamy and head of investment research and asset allocation Herman van Papendorp, said in their 2017 Economic Outlook that growth in South Africa was set to improve marginally this year and agricultural outputs were estimated to recover, thanks to higher rainfall, while exports would probably piggyback off slightly better global economic activity and a modest revival in commodity prices.
“Restocking in response to higher growth expectations could lift growth to above 1 percent in 2017. Though lower food inflation and a probable shift to looser monetary policy in the latter half of 2017 should provide some relief to consumers, households remain exposed to a bleak jobs outlook, high levels of indebtedness and the potential for higher taxes.
“With South African corporates still voicing concerns over muted domestic demand and uncertainty regarding economic policy, employment growth is only likely to improve meaningfully beyond 2017, becoming a larger contributor to household consumption in 2018.”