SA slides further down WEF's global competitiveness index
The country plunges to 67 out of 140 countries surveyed in the latest WEF report
SA has continued its downward spiral in the global competitiveness rankings.
The country has fallen to 67 out of 140 countries, the World Economic Forum’s (WEF’s) “Competitiveness Report” for 2018-2019, released on Wednesday, showed.
This comes as a blow after SA fell into a recession for the first time since the global financial crisis. There have been contractions in nine of the 38 quarters since 2008 and growth has struggled to breach the 2% mark.
While President Cyril Ramaphosa has announced an economic stimulus plan to revive the stagnant economy, the World Bank among other institutions has warned that the effect of this will be limited.
Finance minister Tito Mboweni is expected to provide more detail on the plan at the medium-term budget policy statement next week.
“The index captures the long-term elements for growth in the country over five years or more,” said WEF economist Roberto Crotti. “It takes time between an announcement, implementation and the impact of a change in policy.”
Importantly, the plan needs to demonstrate a strong sense of collaboration between the public and private spheres, the different sectors in the economy and with other economies, he said.
The overall index assesses a set of factors that determines an economy’s level of productivity, a key driver for long-term growth. SA’s ranking plummeted to 61 in 2017 from 47 in 2016.
The latest report uses a new methodology based on the rapid transformation of the global economy due to the fourth industrial revolution.
Crotti said the reports could not be compared, but with the previous methodology the picture would look much the same.
“Many of the factors that will have the greatest impact in driving competitiveness in the future have never been the focus of major policy decisions in the past,” the report reads.
According to the report, SA’s greatest competitive advantages are its financial system (ranked 18th), market size (35th) and innovation (46th).
However, the country should improve in areas including health (125th), institutions (69th) and business dynamism (56th). While SA has been commended for its strong institutions by the credit rating agencies and does well in terms of social capital and budget transparency, the report says the government could be more future-oriented.
SA only lags behind Mauritius in sub-Saharan Africa. In terms of the Brics nations, SA beats India and Brazil but trails far behind Russia and China.
The US claimed the top spot for the first time in a decade.