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Cape Town - South Africa is lacking key drivers to stimulate economic growth, according to Grant Thornton International’s 2013 Global Dynamic Index (GDI).
“South Africa’s global ranking according to GDP (Gross Domestic Product) is 29th, yet when specific drivers of economic progression and growth are measured as per this GDI survey, we score a dismal 52nd overall," said Andrew Hannington, CEO of Grant Thornton Johannesburg.
"One would expect our general scores all to be around our GDP score of 29th as a benchmark. Sadly, in this GDI, they’re dramatically worse than that, which means we’re unlikely to see a growth higher than the current 2%.”
The index shows that South Africa’s main growth drivers are underperforming, making the country less attractive as a place to do business over the last 12 months.
"Even more worrying is the fact that South Africa’s scores in last year’s GDI compared to those of 2013 highlight a stagnant economy with no improvement in any of the performance indicators within the data," said Hannington.
South Africa was ranked 43rd out of 50 countries for GDI 2012, compared to its 52nd position out of 60 countries for GDI 2013. The overall score therefore reflects a 12% decline.
The findings show that China ranks third globally - up 17 places compared to GDI 2012 - behind Australia (first) and Chile (second).
Developed in conjunction with the Economist Intelligence Unit, Grant Thornton’s GDI ranks 60 of the world's largest economies on 22 indicators across five key drivers of dynamism.
Poor work ethic
The key drivers are business operating environment, science and technology, labour and human capital, economics and growth and the financing environment.
South Africa’s ranking of these attributes in the survey was: economics and growth (34th), financing environment (39th), business operating environment (43rd), science and technology (47th) and labour and human capital (55th).
“Our GDI rankings mirror the recent World Economic Forum’s (WEF) 2013-14 Global Competitiveness Report," said Hannington.
In the WEF Report, South Africa performed poorly in relation to an inadequately educated labour force, restrictive labour regulations and poor work ethic in the labour sector.
The latest GDI also provided some interesting comparisons between the relative strengths of mature and developing economies.
The North American region is the most dynamic in the world according to the GDI, with developed Asia a close second overall and the Asia Pacific region ranked third globally.
China has streaked ahead of its Bric counterparts in terms of the development of its business growth environment.
The GDI 2013 reveals that, while the Chinese economy has significantly improved its attractiveness as a place to do business over the last twelve months, Russia, India and Brazil have fallen away and face significant challenges.
Incentives
China has risen 17 places from this time last year to be ranked as the third most dynamic country overall, largely driven by increases in Research & Development, IT spending and labour productivity.
By contrast, the other Bric economies have all fallen down the rankings this year.
The other Bric countries have, like South Africa, all shown a decline in overall score. Russia is down by 5%, Brazil is down by 13% and India down 11%.
“The index suggests the Brics are no longer travelling together. All have slowed over recent months, but it appears China is handling this transition most effectively – certainly as far as prospects for business growth are concerned,” said Hannington.
“The challenge for the other Brics – which seem to be struggling with similar concerns to those in South Africa – is to manage the specific issues, which the index reveals and develop their attractiveness to stimulate economic growth.”
Hannington urged the South African government to critically assess the low growth rate in South Africa.
“We need to incentivise business to create jobs and to improve business sentiment so that we can truly begin to re-energise and encourage much-needed foreign direct investment," he said.
"The jobs for youth proposals need to be speedily executed."
- Fin24
“South Africa’s global ranking according to GDP (Gross Domestic Product) is 29th, yet when specific drivers of economic progression and growth are measured as per this GDI survey, we score a dismal 52nd overall," said Andrew Hannington, CEO of Grant Thornton Johannesburg.
"One would expect our general scores all to be around our GDP score of 29th as a benchmark. Sadly, in this GDI, they’re dramatically worse than that, which means we’re unlikely to see a growth higher than the current 2%.”
The index shows that South Africa’s main growth drivers are underperforming, making the country less attractive as a place to do business over the last 12 months.
"Even more worrying is the fact that South Africa’s scores in last year’s GDI compared to those of 2013 highlight a stagnant economy with no improvement in any of the performance indicators within the data," said Hannington.
South Africa was ranked 43rd out of 50 countries for GDI 2012, compared to its 52nd position out of 60 countries for GDI 2013. The overall score therefore reflects a 12% decline.
The findings show that China ranks third globally - up 17 places compared to GDI 2012 - behind Australia (first) and Chile (second).
Developed in conjunction with the Economist Intelligence Unit, Grant Thornton’s GDI ranks 60 of the world's largest economies on 22 indicators across five key drivers of dynamism.
Poor work ethic
The key drivers are business operating environment, science and technology, labour and human capital, economics and growth and the financing environment.
South Africa’s ranking of these attributes in the survey was: economics and growth (34th), financing environment (39th), business operating environment (43rd), science and technology (47th) and labour and human capital (55th).
“Our GDI rankings mirror the recent World Economic Forum’s (WEF) 2013-14 Global Competitiveness Report," said Hannington.
In the WEF Report, South Africa performed poorly in relation to an inadequately educated labour force, restrictive labour regulations and poor work ethic in the labour sector.
The latest GDI also provided some interesting comparisons between the relative strengths of mature and developing economies.
The North American region is the most dynamic in the world according to the GDI, with developed Asia a close second overall and the Asia Pacific region ranked third globally.
China has streaked ahead of its Bric counterparts in terms of the development of its business growth environment.
The GDI 2013 reveals that, while the Chinese economy has significantly improved its attractiveness as a place to do business over the last twelve months, Russia, India and Brazil have fallen away and face significant challenges.
Incentives
China has risen 17 places from this time last year to be ranked as the third most dynamic country overall, largely driven by increases in Research & Development, IT spending and labour productivity.
By contrast, the other Bric economies have all fallen down the rankings this year.
The other Bric countries have, like South Africa, all shown a decline in overall score. Russia is down by 5%, Brazil is down by 13% and India down 11%.
“The index suggests the Brics are no longer travelling together. All have slowed over recent months, but it appears China is handling this transition most effectively – certainly as far as prospects for business growth are concerned,” said Hannington.
“The challenge for the other Brics – which seem to be struggling with similar concerns to those in South Africa – is to manage the specific issues, which the index reveals and develop their attractiveness to stimulate economic growth.”
Hannington urged the South African government to critically assess the low growth rate in South Africa.
“We need to incentivise business to create jobs and to improve business sentiment so that we can truly begin to re-energise and encourage much-needed foreign direct investment," he said.
"The jobs for youth proposals need to be speedily executed."
- Fin24
