'Junk status inevitable without reform'

Structural reform is possibly the
only way South Africa can turn its
economy around.
With the country’s negative
first-quarter growth, economists
are predicting that junk status will
become increasingly difficult to ward
off unless government steps up to the
plate and takes some difficult, but
necessary, decisions.
Addressing a Cape
Town Business Summit
recently, Nedbank
economist Busisiwe
Radebe said the outlook
for South Africa for the
next three years was
“extremely bleak”.
“We are in a recession
and at this stage we
cannot see how that will
change. Our forecast
at present is that South
Africa will see an
average negative growth this year of
-0.1%, which we predict will increase to
1% in 2017 and about 1.8% in 2018.”
Radebe said the bank did not look at
disaster scenarios and the forecasts were
made with an optimistic view.
“If South Africa, however, is to create
any jobs, we are going to have to grow in
the region of 6% or more.”
Whilst the global economic
slowdown, particularly in China, has
affected South Africa, Radebe said one
of the country’s biggest challenges at
present was labour.
“Our labour force is unpredictable
and it is expensive. We have demands
for ludicrous increases followed by
strikes and disruptions to employment,
which is a massive issue. The country
needs to look at this
very closely and find a
solution.”
Radebe said while
it was obvious that
the national treasury
was “trying its
utmost”, government’s
unwillingness to
address the labour issue
was problematic.
It was critical to make
labour in the country
more flexible while also
bringing its cost down, she added.
“And then, as a country, we need to
start getting tough around contracts
that are not being fulfilled and targets
not delivered. If infrastructure was
due years ago and it is still being built,
then we need to investigate far more
rigorously – heads must roll.”
INSERT & CAPTION
We are in a recession
and at this stage we
cannot see how that
will change.
– Busisiwe Radebe