The SA Daily
21 February 2020
A compelling case
- The SA economy presents a compelling case for government to implement growth-boosting economic reforms and thereby create the necessary conditions for attracting real long-term private sector investment. SA’s wider fiscal deficit and rising debt, yet sluggish growth, means that government is at an economic crossroads which calls for immediate, decisive fiscal consolidation and growth-lifting reforms.
- SA is very likely to lose its only remaining sovereign investment grade rating by Moody’s. A downgrade, likely in the upcoming March Moody’s review, will have a negative, albeit short-lived given that it is arguably discounted, impact on the rand and bonds — but such a downgrade would be a hard knock for already depressed business and consumer confidence. This would further constrain investment and consumer spending.
- Real per-capita GDP growth remains in decline. Our 0.8% and 1.5% real GDP growth forecasts for 2020 and 2021 imply that this will remain in contraction, unemployment will remain high, and inequality will widen further because of the ongoing lack of growth-boosting reforms. Though government has undertaken many measures to remedy the SA economy, implementation has been very slow. The private sector, labour and civil society too would need to complement all efforts in order to achieve prosperity for all.
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