GDPressed

Finweek English Edition - - Cover - Or re­lax as if it’s 1984

READ­ERS HAVE BEEN COM­PLAIN­ING about my pes­simism con­cern­ing the new Gov­ern­ment, State in­sti­tu­tions and the fu­ture of the coun­try as a whole. On the con­trary, I think I’ve been fairly san­guine over the past cou­ple of years on th­ese pages – tak­ing into ac­count, of course, my nat­u­ral predilec­tion for neg­a­tiv­ity, cyn­i­cism and mis­an­thropy.

I can point to col­umns from years back where I said a Zuma pres­i­dency is prefer­able to a Mbeki one and that the Scor­pi­ons are our sav­ing grace (oops!). So by my own rea­son­ing – and in line with devil/deep­blue-sea, rock/hard-place think­ing – things are bet­ter now.

If I’ve been un­fairly ac­cused of be­ing a Cas­san­dra about pol­i­tics, my eco­nomic out­look has been ver­i­ta­bly Pollyan­naish. Just one ex­am­ple that goes as far back as 2005. I said South Africa was a much bet­ter place to live in than Ice­land, no mat­ter what the UN de­vel­op­ment in­dex may say – putting it at num­ber one. And boy was I right. (You all by now know the joke about the cap­i­tal of Ice­land be­ing R3,50?)

But now I’m wor­ried. Last week’s GDP fig­ure came as a bit of a shock even to those of us who’ve be­come used to a low rand, high inflation and all-round cost-cut­ting. I can’t re­mem­ber what it was like mak­ing ends meet in 1984, the last time the econ­omy tanked this way. (Most of my mem­o­ries from those days re­volve around by Frankie Goes To Hol­ly­wood, the big­gest hit of the year. Yes – it’s that long ago.)

While the rand has re­cently strength­ened (not in time for car or flat screen buy­ers who’ll see their dream ma­chines in­crease at least 10% this year), food inflation re­mains stub­born (and you can’t live on in-store losslead­ers alone) and every­one is pay­ing less for the same work or want more work for the same fee. And just when you thought it was safe to get back in your car, oil prices are ris­ing again – up 35% so far this year.

You could point to the fact that com­pared with Ja­pan (and other places) we’re boom­ing. Two con­sec­u­tive quar­ters of more than 15% con­trac­tion must be hara-kiri ter­ri­tory. But the at-least-we’re-not-that­bad-off ar­gu­ment rings hol­low in most SA busi­nesses and house­holds. Re­cent re­search by con­sumer goods gi­ant Unilever and the Uni­ver­sity of Cape Town about South Africans’ at­ti­tudes to­wards the re­ces­sion con­firms that.

Ac­cord­ing to Project Re­boot (what?) 60% of South Africans are wor­ried about the fu­ture and a full three-quar­ters are more cau­tious about their spending and 33% say re­ces­sion is putting strain on per­sonal re­la­tion­ships (I’d say.) And now that the depth of the re­ces­sion is bet­ter known, that num­ber has prob­a­bly climbed. And 21% of SA’s cit­i­zens claimed the re­ces­sion has had no ef­fect on their lives. Pre­sum­ably they all work for Gov­ern­ment or have trans­port con­tracts with S’bu Nde­bele.

This re­ces­sion is cruel in other ways. Those who’ve been most fru­gal are now hurt­ing the most. If you’re a pen­sioner who looked af­ter your money care­fully all those years, you’re earn­ing less in­ter­est and pay­ing more for ev­ery­thing. Con­trary to what Mboweni (or Suze Or­mann, for that mat­ter) has been urg­ing us to do, savers are be­ing hit by the great de-lever­ag­ing. Those of us who’ve been liv­ing be­yond our means – I’ll come out and say it, I’m one of them – and didn’t put some­thing away for a rainy day are be­ing bailed out by the church mice. Life isn’t fair.

And while I feel for the economis­ers, I’m with Cosatu on this one. Cut rates, pump money into the econ­omy and for­get about inflation tar­get­ing. It worked in Zim­babwe, right?

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