Policy uncertainty at levels last seen during Zuma presidency, says North West University
Business School’s policy uncertainty index has risen to a level last seen in the fourth quarter of 2017, due to both local and global factors
Political uncertainty in the third quarter of 2019 rose to a level last seen during the final days of the presidency of Jacob Zuma, the North West University (NWU) Business School said on Wednesday.
Ongoing geopolitical tensions such as the US-China trade war and Brexit has eroded certainty, while SA’s longest business cycle downturn since 1945 has pushed the NWU policy uncertainty index (PUI) to its highest level since the fourth quarter of 2017, NWU’s Business School said on Wednesday.
The index rose to 53.1 index points in the third quarter of 2019 from 52.9 in the second. An increase beyond 50 reflects heightened policy uncertainty; a decline in the PUI means reduced uncertainty.
The index is calculated via three elements: collecting reports citing uncertainty in the media; through a survey of economists; and via the Bureau of Economic Research’s survey of political and policy constraints in their manufacturing survey.
NWU said on Wednesday that correlations had been found between the index and economic performance, with the metric similar to that of the World Uncertainty Index, which is compiled by the IMF and Stanford University.
The international environment had become increasingly risky and uncertain, while locally, the appointment of an 18-member Economic Advisory Council by President Cyril Ramaphosa had come too late in the quarter to influence the policy environment — though it offered potential.
The single biggest positive factor during the quarter was the publication of National Treasury’s growth plan, which if properly implemented, offered the prospect of a more stable and predictable policy environment, NWU said.
SA had also successfully issued bonds in September on favourable terms, which could be seen as an expression of investor confidence in SA, the statement read.