Share

SA has a slow puncture - economist

Cape Town - Growth per capita in emerging markets is still only where the developed world was about 20 or 30 years ago, according to economist Chris Hart, chief strategist of Investment Solutions.

Hart and Glenn Silverman recently launched a book called Half Way There, which deals with research on Brics and SA's role in it.

"Emerging markets won't get there just by looking at the developed world. There is hardly a pulse in the developed world, because to get growth you need to invest," said Hart at a talk in Cape Town.

"The nature of debt is also important. The developed world is mainly borrowing money for its ever increasing welfare spending, while emerging markets are borrowing for investment purposes."

Growth in Brics countries have been slowing and, according to Hart, Brazil is now in a recession and growth in China is slowing.

"The markets liked India's election as the electorate voted for growth and prosperity rather than social welfare. I think India is in the process of taking over as Brics leader," said Hart.

As for South Africa, Hart says it remains a country with a high potential. This is regardless of household finances being under strain and government finances being - in his words - "in tatters".

"South Africa has a slow puncture - we are even behind Yemen in global comparisons," said Hart.

"My concern is that whenever SA is compared to the rest of the world, we are slipping down rankings. The country has, for instance, double the debt and a third of the growth it had in 2008."

If SA continues on its current course, Hart predicts further deterioration. He sees four potential "bombs" which even individually could bankrupt the country if changes are not made. These are the public sector wage bill, nuclear energy, national health and parastatals like Eskom and Transnet.

"SA should seriously consider if it wants to punch above its weight regarding being a member of Brics. SA might be big in Africa, but certainly not in the rest of the world, like China," said Hart.

"I think SA should rather look at a country like Mauritius, which has no natural competitive advantage so it became one of the easiest places to invest and do business."

In 1980 the gross domestic product (GDP) per capita of Mauritius was less than half that of SA's, while it currently is 50% more than that of SA. China and Chile have also overtaken SA in this regard. In 1990 Chile's GDP per capita was about the same as SA's and currently it is about two-and-a-half times more than SA's.

"SA must understand that business is the source of all wealth in society. We must also understand that corruption destroys the value chains in an economy and that effective institutions are very important," said Hart.

- Fin24

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.97
-0.2%
Rand - Pound
24.06
+0.2%
Rand - Euro
20.57
+0.1%
Rand - Aus dollar
12.36
+0.5%
Rand - Yen
0.13
+0.7%
Platinum
900.98
-0.2%
Palladium
1,000.76
-0.5%
Gold
2,154.33
-0.3%
Silver
24.93
-0.5%
Brent-ruolie
86.89
+1.8%
Top 40
65,711
-0.8%
All Share
71,937
-0.7%
Resource 10
52,899
-0.8%
Industrial 25
99,362
-1.1%
Financial 15
16,590
-0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders