SA Economy
May Have Turned the Corner
See the
article below Carin
Smith / Fin24 on Old Mutual
Investments group chief economist, Rian le Roux. We need a bit of positive
news, isn’t it?
South
Africans have to guard against being overly pessimistic, Old Mutual Investment
Group chief economist Rian le Roux told Fin24 on Thursday.
"I think SA
has turned the corner as far as the weak economy is concerned. The shocks are
fading and maybe there could even be interest rate declines next year and a
better year for mining. So, the economy can start to surprise us," said Le
Roux.
"The last
five years the growth path surprised on the down side, but I think into 2017 we
might finally have a raise in activity."
He said if
one looks back over the last number of years at shocks like load shedding, food
inflation, the rand and a host of strikes, one can see a lot of those issues
have started to stabilise.
"Clear
confidence in the economy is deeply depressed, driven to a large extent by the
state of the economy, but over the last while there have also been positive
aspects like the case against Finance Minister Pravin Gordhan being dropped and
the report by the Public Protector being released," said Le
Roux.
However, le
Roux says that it’s too soon to tell what kind of political and economic impact
the contents of the report will have.
“The bottom
line is that the release order shows that mounting pressure against state
capture, corruption and the patronage network is starting to yield results,” he
said.
"I think on
the margin politics are taking a turn for the better. Yes, the economy is still
quite weak and it looks like the third quarter will be quite weak too and
consumers are under pressure. There is no question about it that in the shorter
term there are lots of headwinds still."
When one
looks "deeper" into 2017, he thinks a number of these headwinds could become
tailwinds. The weaker rand is certainly good for tourism and competing
exporters.
The big
question
"I think we
should guard against becoming overly pessimistic. The question is, however,
whether it is possible to acquire confidence boosting policy measures,
especially in the arena of the labour market and if we could get politics on a
more stable footing," he said.
"Those in
the manufacturing sector say uncertainty is one of the biggest reasons for not
investing."
He thinks
peak inflation is also now clearly in sight and that there is a reasonable
chance that SA could again escape a ratings downgrade to junk at the end of the
year.
"The big
issue is the longer term. The first goal must be to reduce the negative outlook.
That will require economic growth and high levels of confidence, which will
require a more stable political environment," he said.
"People
forget the reverse is also true. When one thing is a boost, other things get a
boost too. Of course I don't think we are out of the woods but don't be overly
pessimistic.
Friendly
Greetings
Andre
Delport