Financial Mail

The AB approach to the IMF’s GDP stats


tatistics from those looming global bureaucrac­ies, the World Bank and the Internatio­nal Monetary Fund (IMF), have taken on the kind of iron meaning that cricket fanatics invest in Wisden’s cricket statistics. The IMF has revised downwards its projection­s for global GDP growth in 2015 (3,5%) and SA (2,1%). It is tempting to see SA’s performanc­e as inextricab­le from global conditions, and even to be comforted when we are compared to Russia (minus 3%).

GDP has its uses as a measure, but many equity investors pay little attention to these numbers except as part of a broad context. They are far more interested in the prospects of individual companies, many of which deliver earnings far in excess of local or global GDP growth.

And effective companies themselves refuse to accept low growth as a given because of ambient economic conditions — they are always finding ways to defy or exploit obstacles. They see GDP and other measures like interest rates and inflation (or deflation) as challenges, not determinan­ts.

Just as no bell is rung when a market reaches the bottom, so investors (foreign and domestic) generally do not stand up and announce that they have decided not to invest in a country. They just don’t invest. What we do know is that many of our hindrances to growth and deterrents to investment are self-inflicted. The same IMF and World Bank have repeatedly noted our mining policy uncertaint­y, unsuitable labour laws and electricit­y problems, and our routine occupation of last place in the world for maths and science education.

We need to pay less attention to the IMF’s forecasts as a predictor of our economic success, and instead to take the attitude of AB de Villiers against the West Indies last Sunday. In breaking the world one-day record for the fastest century, he showed breathtaki­ng confidence as he employed all the shots in the book and a few more not yet invented. He refused to let the weight of previous statistics define him.

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