Fin24

SA prospects dim - economist

2012-10-16 21:00

Johannesburg - South Africa's economic prospects have become dimmer and could worsen due to widespread labour unrest, an economist said on Tuesday.

Old Mutual Investment Group SA economist Rian le Roux said in a speech prepared for delivery in Johannesburg that recent disruptions in the market and a weakening rand could result in a lower gross domestic product growth, higher inflation, and wider current account deficits for the country.

He said the wider deficit would lead investors to see rising macroeconomic risks in the country.

"Foreign investors have good reason to be concerned about the macroeconomic risks - of 16 emerging markets... South Africa measures dead last in terms of its combined current account and budget deficits," he said.

The labour unrest had also highlighted South Africa's lack of competitiveness to the world.

"While our overall ranking in the World Economic Forum at 52 out of 144 countries in its 2012/2013 Global Competitiveness Index is not too bad, we rank awfully lowly in some key areas."

These included the quality of primary and higher education, the flexibility of wage setting, hiring and firing practices, and pay and productivity.

"South Africa was ranked absolute last for labour-employer cooperation," he said.

Le Roux said he was not optimistic that conditions to stimulate growth would improve significantly over the near term.

"Although the weaker rand will help boost exports, rising cost structures may quickly erode the benefit," he said.

"At the same time, any hope of major direct foreign investment has likely been seriously dented by recent events and concerns over future political, economic, and policy stability."

He said the government should see the recent downturn as a sign to focus more on its economic policies.

"Hopefully, the recent labour unrest, downgrades by rating agencies and the rand's slump will dramatically elevate SA's economic challenges up the government's policy agenda."

Comments
  • john.snyman.180 - 2012-10-16 21:11

    http://www.fin24.com/Markets/Equities/Global-markets-push-JSE-to-new-high-20121016 yeah... seriously... right after I shorted the Top40... you better be right Mr. le Roux

      claudia.meads - 2012-10-16 21:21

      About the most irrelevant comment today, do you actually understand the article, let alone the relevance of your comment..?

      john.snyman.180 - 2012-10-16 21:33

      Well actually I do, I'm a equity derivative trader so it's my job to know... economist generally have long term macro views, they tend to be out of sync with financial markets. Fact remains, our equity market is pushing up like crazy.

      FUNKMASTERFLEX.AKA.BAIN - 2012-10-16 23:32

      If you an equity derivs trader,why trading against the trend? The weaker rand effects mining stocks which we heavily weighted for in top40,Not saying we going or not going to be zim but in zim dollars(local currency) their market performed very well.So if you long the JSE does not mean you cant be negative on future of SA.The market interprets data very different to man on street in short term(maybe irational)

      Blixum - 2012-10-17 10:32

      Hierdie is 'n Skerp Snyman...

      heathway.master - 2012-10-17 11:29

      This could not be less important to the pathetic bunch of politicians vying at Mangaung to see who is going to be elected as leader ( What a complete joke ) and then will be able to sink his hands deep into the cookie jar. Until this magnanimous decision is made, let the country burn and rot.

  • lacrimose.wolf - 2012-10-17 01:26

    "Hopefully, the recent labour unrest, downgrades by rating agencies and the rand's slump will dramatically elevate SA's economic challenges up the government's policy agenda." This is not-so-secret-code for "do something or get the **** out". Why is it that our govt has remained impervious, unshaken in the face of daily violent protests, dead citizens, dead policemen, raped grannies, but are now madly scrambling to re-assure organisations and ratings agencies that all is good? And what is UP with rating agencies and organisations that you only ever see the shiny, happy, dancing people and never, ever, the PEOPLE that live the perpetual misery?

  • rhett.deklerk - 2012-10-17 06:06

    Labour unrest, I'm sure no international countries would not gain from a weekend economy...

  • mark.mcdonogh.1 - 2012-10-17 06:23

    What our government fails to realize is that they are employed by those who vote them in. Would it not be justice if only ANC members should pay tax according to the laws of THEIR government. What you vote for is what you get. The ANC paints themselves with a thin veneer of being upright, honest, above reproach and sell themselves to a deceived populace who believe that they will be delivered by these smooth talkers. This is precisely what the devil did in the garden of Eden. His nature is to deceive others. Our dilemma is no different. The sugar coated promise turns out soon after election to be nothing more than a trap and a license for evil in all its forms. The only honest thing for the ANC government to do is to hang its head in shame and ask to be relieved of its position. Employers of the ANC please fire your unproductive employee and so open the way for the salvation of our nation.

  • denis.dendrinos - 2012-10-17 09:29

    "These included the quality of primary and higher education, the flexibility of wage setting, hiring and firing practices, and pay and productivity." And we have the unions to thank for this one..... Do as little as possible for max pay and strike every year even after you've signed a 3 year agreement. The unions are essentially doing the exact opposite that they keep claiming to be doing and fighting for - they are simply making the poor even more poor!

  • shaun.bezuidenhout.52 - 2012-10-17 10:48

    I cannot understand how the economy is not a priority, without GDP there is no future!

  • freddy.vanwijk - 2012-10-18 05:23

    With the cost of living going up daily and the labour unrest combined, economic outlook is very dim indeed because government has persistently failed to curb price increases and the "high flyers" in the private sector are clearly not making an effort as they have their own personal agendas. If interest rates do go up, then the economy will crash.

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