Competitiveness index shows SA is still drifting
Drags include SA’s deteriorating education standards, rising state debt, inefficient SOEs and persistently high unemployment
SA’s global competitiveness continued to falter despite surprisingly strong growth in 2017 and a presidential shake-up that led to Cyril Ramaphosa taking over at the helm.
The chief economist and head of operations at the IMD World Competitiveness Centre, Christos Cabolis, said the effects of these developments would only be felt in the long term.
Out of 63 countries ranked, SA stood at 53, having hovered between 52 and 54 over a number of years.
SA was stable, the IMD said. It cited progress in the institutional framework driven by exchange rate stability, a minor reduction in crime and some measures on gender disparity that had contributed to a slight increase in government efficiency. “Positive GDP growth and an improving current account deficit suggest that SA may be moving out of its transition period, while the continued broad range of export partners supports stability,” the IMD said.
Cabolis, however, said that SA had to tackle deteriorating education standards, the limited fiscal space and increasing debt, inefficiency in state-owned enterprises and the persistently high unemployment rate to make any headway.
“This requires a strategic plan that takes into account SA’s resources, but right now it’s not clear what that plan is,” he said.
The economy was not growing enough on a sustained basis to drive job creation, said Old Mutual Investment Group’s head of economic research, Johann Els.
“We’ve had 20 years to fix the education system but we haven’t because the NDP hasn’t been implemented,” he said, referring to the National Development Plan..
Without the necessary policy intervention to tackle growth, youth unemployment and education issues, high unemployment was likely to persist in the foreseeable future, NKC analyst Gerrit van Rooyen said.
The US replaced Hong Kong in first place among the world’s most competitive economies, while Singapore, the Netherlands and Switzerland made up the rest of the top five.
In September 2017, SA plummeted in a major ranking of global competitiveness, falling 14 places to 61 out of 137 countries in the World Economic Forum’s competitiveness index as the strength of its institutions and its financial markets eroded.
IMD World Competitiveness Centre 2018 ranking