SA must urgently deal with problems hurting the economy
01 February 2024 - 15:09
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The recent decision by the IMF to revise SA’s economic growth rate to 1% in 2024 from 1.8% in October 2023 does not come as a surprise given the country’s struggles in implementing necessary policy reforms.
SA’s economic landscape has been marred by persistent challenges, prominently exemplified by continued monopoly at Eskom, preferential procurement in state-owned enterprises, corruption and cadre deployment. In addition, persistent load-shedding not only disrupts citizens’ daily life but inflicts severe setbacks on business, hindering productivity and hampering the overall growth trajectory.
Transnet’s apparent inability to address derailments and equipment shortages has also significantly added to the economic constraints faced by the country. The logistical inefficiencies in the country’s transportation infrastructure exacerbate the hurdles faced by various industries, limiting their capacity to operate efficiently and contribute to economic expansion. A concerted effort to revamp and modernise transportation systems is imperative to alleviate these bottlenecks and foster a more conducive environment for economic development.
Geopolitical tensions further compound SA’s economic woes. The repercussions of conflicts in Ukraine and Gaza reverberate through the nation’s freight rail sector, adding to pre-existing difficulties such as port deficiencies and supply chain challenges.
The IMF’s revised GDP forecast of 1%, while marginally higher than Fitch’s estimate of 0.9%, falls below the SA Reserve Bank’s more optimistic projection of 1.2%. Interestingly, Bank of America offers a more positive outlook, estimating a growth rate of 1.5%. These disparities underscore the uncertainties surrounding SA’s economic trajectory and the need for a comprehensive and cohesive government economic strategy.
Unfortunately, SA’s own policy choices place the country at a disadvantage compared, for example, to Nigeria, which is projected to grow by 3%. Other Brics nations such as China (4.6%), Brazil (1.7%), and Russia (2.6%) also exhibit higher growth rates. This discrepancy underscores the urgency for SA to deal with corruption, Eskom’s monopoly and policies such as preferential procurement at state-owned enterprises, which hinder economic growth.
Mlondi Mdluli Centre For Risk Analysis
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: IMF revision on growth is no surprise
SA must urgently deal with problems hurting the economy
The recent decision by the IMF to revise SA’s economic growth rate to 1% in 2024 from 1.8% in October 2023 does not come as a surprise given the country’s struggles in implementing necessary policy reforms.
SA’s economic landscape has been marred by persistent challenges, prominently exemplified by continued monopoly at Eskom, preferential procurement in state-owned enterprises, corruption and cadre deployment. In addition, persistent load-shedding not only disrupts citizens’ daily life but inflicts severe setbacks on business, hindering productivity and hampering the overall growth trajectory.
Transnet’s apparent inability to address derailments and equipment shortages has also significantly added to the economic constraints faced by the country. The logistical inefficiencies in the country’s transportation infrastructure exacerbate the hurdles faced by various industries, limiting their capacity to operate efficiently and contribute to economic expansion. A concerted effort to revamp and modernise transportation systems is imperative to alleviate these bottlenecks and foster a more conducive environment for economic development.
Geopolitical tensions further compound SA’s economic woes. The repercussions of conflicts in Ukraine and Gaza reverberate through the nation’s freight rail sector, adding to pre-existing difficulties such as port deficiencies and supply chain challenges.
The IMF’s revised GDP forecast of 1%, while marginally higher than Fitch’s estimate of 0.9%, falls below the SA Reserve Bank’s more optimistic projection of 1.2%. Interestingly, Bank of America offers a more positive outlook, estimating a growth rate of 1.5%. These disparities underscore the uncertainties surrounding SA’s economic trajectory and the need for a comprehensive and cohesive government economic strategy.
Unfortunately, SA’s own policy choices place the country at a disadvantage compared, for example, to Nigeria, which is projected to grow by 3%. Other Brics nations such as China (4.6%), Brazil (1.7%), and Russia (2.6%) also exhibit higher growth rates. This discrepancy underscores the urgency for SA to deal with corruption, Eskom’s monopoly and policies such as preferential procurement at state-owned enterprises, which hinder economic growth.
Mlondi Mdluli
Centre For Risk Analysis
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
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