Econ­omy is the vic­tim of po­lit­i­cal fight­ing, says UN re­port |

UN says SA busi­ness likely to con­tinue to be neg­a­tively af­fected by pol­icy un­cer­tain­ties, weak sen­ti­ment

Pretoria News - - BUSINESS REPORT - SIPHELELE DLUDLA [email protected]

THE UN SAID that po­lit­i­cal in­ter­fer­ence and pol­icy un­cer­tainty in South Africa were at the cen­tre of the coun­try’s eco­nomic woes and ris­ing un­em­ploy­ment fig­ures.

The UN said dur­ing the re­lease of its World Eco­nomic Sit­u­a­tion and Prospects 2020 re­port yes­ter­day in Jo­han­nes­burg that growth in South Africa was now es­ti­mated at 0.5 per­cent for 2019, re­main­ing well be­low po­ten­tial amid weak in­vest­ment, en­ergy short­ages and high un­em­ploy­ment.

Man­ag­ing di­rec­tor of re­search at

Plus Eco­nom­ics, Dr Kirsten Thompson, said the coun­try needs to re­vive growth on the sup­ply side, be­cause the de­mand side re­mains sub­dued.

“The South African econ­omy has be­come a vic­tim of po­lit­i­cal fight­ing, and if we can just sort that out , our econ­omy can find the space it needs to grow,” Thompson said.

“It is not up to the gov­ern­ment to cre­ate jobs, it is up to the gov­ern­ment to be a fa­cil­i­ta­tor, pro­tec­tor and en­abler of our busi­ness en­vi­ron­ment.

“We need do­mes­tic in­vestors and for­eign in­vestors to be spear­ing busi­ness ac­tiv­ity, be­cause when we have strong busi­ness ac­tiv­ity that be­comes the engine room of our econ­omy of cre­at­ing jobs.”

Over the last decade the South African econ­omy has been battered by a string of crip­pling power cuts, un­cer­tainty over pol­icy di­rec­tion, and weak busi­ness ac­tiv­ity.

The UN said gross do­mes­tic prod­uct (GDP) per capita growth was pro­jected to re­main in neg­a­tive ter­ri­tory in 2020. This fol­lows the IMF low­er­ing of the eco­nomic growth to 0.8 per­cent this year, down from a pre­vi­ous fore­cast of 1.1 per­cent growth.

The SA Re­serve Bank also low­ered its fore­cast of GDP growth for 2019 to 0.4 per­cent from 0.5 per­cent, and to 1.2 per­cent from 1.4 per­cent for 2020.

The UN said prospects for a vig­or­ous re­cov­ery in South Africa were fee­ble.

It said the South African econ­omy would likely con­tinue to be neg­a­tively af­fected by pol­icy un­cer­tain­ties, weak busi­ness sen­ti­ment and lim­ited fis­cal pol­icy space.

El­liott Har­ris, UN chief econ­o­mist and as­sis­tant sec­re­tary-gen­eral for eco­nomic de­vel­op­ment, called for a “more bal­anced pol­icy mix”.

Har­ris said the over-re­liance on mone­tary pol­icy was not just in­suf­fi­cient to re­vive growth, but also en­tailed sig­nif­i­cant costs, in­clud­ing the ex­ac­er­ba­tion of fi­nan­cial sta­bil­ity risks.

“A more bal­anced pol­icy mix is needed, one that stim­u­lates eco­nomic growth while mov­ing to­wards greater so­cial in­clu­sion, gen­der equal­ity, and en­vi­ron­men­tally sus­tain­able pro­duc­tion,” he said.

“Pol­i­cy­mak­ers should move be­yond a nar­row fo­cus on merely pro­mot­ing GDP growth, and in­stead aim to en­hance well-be­ing in all parts of so­ci­ety.

“This re­quires pri­ori­tis­ing in­vest­ment in sus­tain­able de­vel­op­ment projects to pro­mote ed­u­ca­tion, re­new­able en­ergy, and re­silient in­fra­struc­ture.”

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