Finance Minister Pravin Gordhan. Picture: TREVOR SAMSON
Finance Minister Pravin Gordhan. Picture: TREVOR SAMSON

Going into the festive season a year ago, SA had been shaken by Nenegate and only just reassured by the reappointment of Pravin Gordhan as finance minister.

Going into the new year, Gordhan brought the CEOs of SA’s largest companies together in what has become a new kind of partnership between business and the government, with a new sense of purpose. That partnership, forged initially around the World Economic Forum in Davos to restore investor confidence in SA’s battered markets and to avert a ratings downgrade, has extended to include labour and community leaders and has become a more durable initiative.

It has helped to steward the economy through a very difficult year, globally and locally, and to keep the country’s sovereign rating at investment grade, despite it all.

Going into 2016, the rand was a victim of SA’s dysfunctional politics. But it has since been through such dramatic ups and downs that the volatility in the exchange rate in 2016 has been back at 2009 global financial crisis levels. And though in 2015, the rand was a one-way bet downwards, in 2016 it has swung in both directions on global and local surprises.

This has been quite a year. No one at the start of 2016 could have predicted that the UK would vote to pull out of Europe, still less that the US would vote in Donald Trump.

We don’t yet know what either of those looks like yet: 2017 will be the year in which it becomes clear what kind of Brexit the UK seeks and when and whether it might get it — and what Trump’s economic policies will be and what they might mean for the US and for the global economy.

Either or both could have a dramatic effect on emerging markets, SA included, as they unfold — so we go into the new year with an extraordinary degree of uncertainty about the global economic environment in which SA must try to compete and to tackle its socioeconomic challenges.

Those are formidable, particularly given that SA remains very vulnerable to the swings and roundabouts of global market sentiment. It has a sizeable fiscal deficit and a current account deficit which is now back to more than 4%, and both need to be financed by constant inflows of foreign capital.

That could mean the rand remains under pressure in 2017 as the US and UK scenarios play out, limiting the space for the Reserve Bank to cut interest rates. The continuing risk of a ratings downgrade just adds to the pressure.

The more profound problem, though, is that SA hit an unemployment rate of 27%, even on the narrowest definition, and will, at best, grow 0.5%, possibly less, with 2017 likely to see hardly more than 1% growth. The country is going backwards at a rapid rate. And though there have been some tiny signs of the structural reforms needed to boost investor confidence and support higher rates of growth and job creation, there has so far been little or no real action. And with horrors such as the new Mining Charter coming out of the government, it’s often one step forwards, two steps back.

Business has found its voice in newly assertive and constructive ways, and the newfound sense of purpose and engagement can only be good for SA. But it can go only so far without collaboration and buy-in from departments in the government other than the finance ministry and one or two other economic ministries.

But if 2016 has been a watershed year for the global economy, as well as for business in SA, it has been if anything even more extraordinary for the political contestation that has opened up in the ANC and in the government itself. Which way that will go will become clear only in 2017. We can but hope that the balance of forces tips in the direction of trying to bring about better growth and better outcomes for all in SA.

Happy holidays.

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