Three of our best economic minds in the country recently unpacked this burning question during a robust webinar hosted by the Bureau of Market Research as part of this year’s Economist of the Year competition.
What makes this competition prestigious is that it is supported by the University of South Africa (UNISA) as a partner, but more so, it creates a platform for economists to share their views on the state of our economy, and more importantly what South Africans may expect in the near future.
This comes in the wake of the nationwide shutdown attempted by COSATU and SAFTU as the union members called for urgent government interventions to curb the socioeconomic and political factors resulting in the bleak economic climate – a clear indication that South Africans have had enough and have lost faith in government’s economic policies. One of the primary concerns expressed by the unions is that while workers’ salaries have not shown much of an increase, consumer inflation has increased substantively – CPI numbers released by Statistics SA recently showed that annual consumer price inflation was 7,8% in July 2022, up from an already high 7,4% during June 2022.
Despite the recent unemployment figures currently standing at 33,9% in the second quarter of the year, the 0,6% decline does little to quell the problem that most South African households are facing. The bottom line is that 8 million South Africans are currently unemployed.
The panellists during this year’s webinar were Nicola Weimar, chief economist for Nedbank Group, Dr Roelof Botha, renowned economic advisor from the Optimum Investment Group, and Dr Nthabiseng Moleko from the University of Stellenbosch Business School.
These distinguished economists had divergent views regarding questions that pertained to what they believe were the major actions that needed to be taken in order to fast-track economic growth and to create hope.
Nicola Weimar said that we can have a positive outlook and hold on to growth. From her perspective, the support for growth comes from continued consumer spending, and it is evident that some life is returning to infrastructure. Weimar also noted that it is expected that fixed investment activity will be positive, while government spending is making a small contribution towards GDP growth.
Weimar predicts a GDP growth of 1,7% for this year, despite the fact that our economy has been negatively impacted by what is happening globally, like the Russia-Ukraine war. She believes that in order to fast-track investment growth, it is key that the energy crisis be resolved and that load shedding needs to be ended so that adequate space is created for faster economic growth.
Dr Roelof Botha, however, said: “Wrong economic policies can make or break a country, as seen in countries like Venezuela and South Africa which is currently still recovering from a decade of pathetic government and incompetent appointments in state-owned enterprises.” He did, however, express his optimism about the fact that he believes we currently have a president who understands economics well enough to turn the ship around from useless economic policies to ones that have closer cooperation with the private sector.
Meanwhile, Dr Nthabiseng Moleko believes that South Africa is unique in that we have a stable macroeconomic policy framework. We do have a history of fiscal policy that is sustainable. We can argue whether this is sufficiently expansionary, how we can ensure that the revenue generation is balanced but also sustainable, and how better to use that allocation in terms of the functionality of the state and government.
But the key thrust is that we must deal with the issue of growth, Moleko said. What is important are the drivers of the growth for our country. We have not seen, for example, sufficient productivity from the side of business, amongst others. She also projects growth being at around 2%.
She also added that we see constrained consumption in households, interest rates going up and the cost of living at levels we have never seen before. The rate at which wages are going up is not equal to the cost of livelihoods and cost of living – and this echoes the rationale of the national shutdown.
Moleko strongly advocates for reinvestment in the productive sectors, especially in marginalised provinces like Eastern Cape, Mpumalanga, Northern Cape, North West and Free State.
“The Bureau of Market Research, in partnership with UNISA, was privileged to host this compelling conversation as a means to bring a message of hope to all South Africans for a brighter future that we all deserve,” concluded Professor Deon Tustin, chief executive officer of the organisation.
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