TIM COHEN: Mechanics tasked with fixing economy have wrong screwdrivers
A new competition law is not going to remedy a situation the government has helped create
In the midst of all the hubbub about VBS bank and SA’s new finance minister, something really dramatic has been missed: SA is now in its longest downward business cycle phase for more than 73 years. Why? The IMF has joined the Reserve Bank and the Treasury in downgrading SA’s economic growth in a revision to its World Economic Outlook from 1.5% for the current year to 0.8%. The change is dramatic, effectively halving the growth prospects. In no other country around the world was economic growth cut so dramatically. How did they get it so wrong? I think I have an answer to these questions — or at least an inkling of an answer. But it’s worth diverting a bit to illustrate why the miscalculation is worrying. In revising its growth targets downwards, the IMF is simply following the revisions by a host of local banks, institutions and the Treasury after half of the actual growth numbers have come in. But the worrying thing is how consistent these misreadings have been — and particularly ...
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