POS­I­TIVES EVEN AS RAT­INGS AGEN­CIES DOWN­GRADE SA

Finweek English Edition - - COVER -

At the World Eco­nomic Fo­rum (WEF) held in Cape Town ear­lier this month, there was no hid­ing the state of the South African econ­omy. Gov­ern­ment spin ex­cus­ing the hor­ri­ble fig­ures and bleak out­look was swal­lowed whole by few of the jaded econ­o­mists present.

Peter At­tard Mon­talto, economist at No­mura, de­scribed the three main lines of rhetoric with re­gard to the coun­try’s growth as “a lit­tle ir­ri­tat­ing”.

Ac­cord­ing to Mon­talto, cab­i­net min­is­ters tended to in­fer that the coun­try should be very happy with these lev­els “given the energy cri­sis is to blame”; the growth per­cent­ages were com­ing off a higher base than the rest of Africa; and the coun­try was still bat­tling with the legacy of apartheid.

The sense was that the gov­ern­ment was happy to “sit it out” and wait for growth to re­sume from 2020 on­wards. Mon­talto said No­mura didn’t find this pos­i­tive at all, and that the apartheid com­ments − which “seemed much more wide­spread among pol­icy mak­ers than ever be­fore” − would not wash with in­vestors.

With the right pol­icy choices – and a re­li­able power sup­ply − No­mura es­ti­mated that growth to be at 5% to 6%.

A re­port re­leased at the Fo­rum SA noted that South Africa had fallen in global com­pet­i­tive­ness rank­ings be­cause of weak ed­u­ca­tion sys­tem and l abour mar­ket un­cer­tain­ties, ac­cord­ing to the World Eco­nomic Fo­rum in Cape Town.

The re­port com­piled by the WEF in con­junc­tion with the In­ter­na­tional Bank for Re­con­struc­tion and De­vel­op­ment (IBRD), the African De­vel­op­ment Bank (AfDB) and the Or­gan­i­sa­tion for Ec o n o mi c Co - o p e r a t i o n an d De­vel­op­ment (OECD) said Mau­ri­tius had streaked past SA as hav­ing the most com­pet­i­tive econ­omy in Africa.

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