The South African economy is in for another “volatile and messy” period in the lead-up to the national elections in 2019, but economic analysts are positive in the long-term, Sizwe Nxedlana, chief economist at FNB, told delegates attending the South African Freight Forwarders’ Association (Saaff) Congress 2016 in Johannesburg yesterday (Tuesday).
“Last year, South Africa saw the weakest economic growth in 15 years and this year is projected to be even weaker due the factors we continue to hear about – the drought, a growth slowdown in China, a slump in commodity prices and the volatility of capital expenditure to emerging markets,” he said.
Nxedlana pointed to ongoing low business confidence levels recorded monthly by the Bureau for Economic Research (BER) where the biggest constraints to business growth highlighted by local and global investors in the SA economy were a slowdown in general domestic demand as well as general political decline.
“Low business confidence impairs investment potential, stifles local production and impacts export growth so it’s clear we need better political leadership, otherwise we are literally fighting the good fight with one hand tied behind our backs,” he commented.
Nxedlana’s optimism around improved growth prospects in the long-term is focused on the recent outcomes of the local elections. “We saw how much support the current government lost. This shows that if there is no good governance and sound financial policies; governments can be voted out,” he said.
On the plus side, in the short-to-medium term the slowdown in domestic spend has meant that the country’s trade deficit has improved which balances out the slump in exports with a similar decrease imports. Nxedlana highlighted that South Africa had a trade deficit of R100 billion in 2014, which was down to R18bn in 2015, and for the first six months of this year, South Africa recorded a trade surplus of R17bn.
