‘Timid’ rebound predicted for SA

A “TIMID” rebound of 0.6% in SA’s growth this year is projected by the Organisation for Economic Co-operation and Development (OECD) as investment and exports recover moderately with the improving international economy.

The OECD notes in its 2017 Economic Survey of SA that low growth and high unemployment are weighing down social progress and “bold structural reforms” are needed to unlock the economy.

Growth has been disappointing over the past few years, with weak consumer demand, falling business investment, policy uncertainty drought damping activity.

“Reviving economic growth is crucial to increase wellbeing, job-creation and inclusivity,” the survey emphasised.

“As there is limited room for monetary and fiscal stimulus, bold structural reforms, supported by social partners, are needed to unlock the economy.”

Reforms were needed to increase access to network sectors and services and and to improve the functioning of the labour market. The quality of education also needed to be improved to tackle skills shortages. Reducing the cost of energy and developing transport infrastructure could boost the economy.

The OECD survey noted bottlenecks remained in infrastructure and costs of services, which increased the cost of inputs for firms. Key sectors such as telecommunications, transport, energy and services needed to be opened up to greater competition.

The OECD remarked on the fragile confidence in the economy, given changes in the political environment.

“A rise in political tensions could further restrain private investment. On the international dimension, the rand remains highly responsive to US interest rates and therefore exposed to their increases. In addition, as the UK is SA’s largest European trading partner, uncertainty about Brexit may affect imports and financial flows.

“Finally, the outlook could be better if international commodity prices keep on increasing. Also, falling food prices could boost household demand.”

Boosting entrepreneurship was crucial to foster job-creation, the OECD said. — BDLive