President Jacob Zuma
President Jacob Zuma

A developmental economist, Peter Draper, said 2017 was a difficult year for South Africa with low growth and 2018 will be determined by who will lead the ruling African National Congress (ANC).

“This was a bad year. There was low economic growth and low investor confidence. The ease of doing business in the country was also low,” Draper, managing director of the Pretoria-based Tutwa Consulting, told Xinhua.

He said South Africa faced social, political and economic challenges. The country’s state enterprises like the power utility, Eskom and national airliner, South African Airways were rocked by governance deficiency and the government had to bail them.

The World Bank predicts that the country Gross Domestic Product will grow by only 0.6 percent. South Africa’s Finance Minister Gigaba said the economy would grow by 0.7 percent in 2017 and 1.1 percent in 2018.

Draper mentioned the cabinet reshuffle done by President Jacob Zuma as one of the source of problems. The expert stated that the state capture allegations are also hurting investment and business confidence.

The country continued to experience unemployment, poverty and inequality, he said.

The ANC will hold the national conference in two weeks’ time to elect the new leadership. Draper said, “It’s very difficult to say how 2018 would be. Everything will depend on who will win the ANC conference. The markets are waiting to see if the winner will inspire confidence in business, customer and investors. Politics will determine everything.”

There have been a race to succeed the current ANC president Jacob Zuma which have unsettled the markets. There is a possibility that the rand will stabilize or drop depending on the winner who will outline the policies. Whoever wins is expected to continue with the party policy.

The expert warned that recession will result in capital flight, unrest and strikes.

He said, “We also wait to hear what the finance minister will say in February next year in his budget speech who will set the tone for the country’s future in terms of policies and what the government intends to do. Recession would result in about 150 billion U.S dollars, leaving the country difficult to service debts by individuals and governments if it does happen.”

South African Reserve Bank deputy governor Daniel Mminele said they are confident the situation will improve.

He said, “2018 provides an opportunity to press the ‘reset button’ and, through a collaborative approach, to try and break the self-reinforcing negative feedback loop of policy uncertainties, low private-sector confidence, subdued investment in productive capacities, and poor competitive performance.”

Draper said the country is expected to continue with its foreign policy next year regardless who wins. Its Pan Africanist policy approach will continue. Enditem

Source: Xinhua/NewsGhana.com.gh

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