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Johannesburg – Economic growth means nothing unless you can see it in the context of population growth, cautioned analyst and political economist JP Landman at the annual convention of the SA Property Owners Association (Sapoa) on Thursday.
“What is the good of generating more income if you are generating babies at the speed of light?” asked Landman.
At the same time, he said, if one estimates that SA gets one new immigrant every 3.5 minutes – an estimation he regards as a reality in the country – then SA’s population growth is 1.65% per year.
“So, if SA’s economy grows less than 1.65% per year, the country would not be reaching its social-economic growth. And currently SA is growing at a slower rate than our population growth at a consensus level of 0.5%,” said Landman.
It is estimated that factors like electricity constraints is costing SA 1% to 1.5% in economic growth and the drought 1%, while the commodity price slump, political issues and a lack of business confidence makes a further impact on economic growth, he pointed out.
“The best characteristic I can give of where SA’s economy is at now would be to describe it as ‘austerity light’. The bottom line is that SA needs good proper rains and secure electricity supply from Eskom, then we could see the economy turning around by increasing the economic growth to a rate higher than the population growth,” said Landman.
In his view, one way SA could try to get out of its economic “rut” would be, rather than focusing on macro-economics, to focus on individual sectors in society where economic growth can still be stimulated and then leading to creating more jobs and wealth.
One sector he pointed out as one where there has been a huge turnaround – and despite the drought – is the agriculture sector. Agriculture has produced 40% more in 2014 than in 1994, for instance and also employs more farm workers today than about five years ago.
As for the potential of growth through infrastructure spending, Landman does not think the public sector can spend much more than its current 6.2% of gross domestic product (GDP) on infrastructure.
His advice to businesses is that they cannot do much about rain or Eskom, but that they can build their individual businesses in such a way to see a constant improvement in productivity “by either doing old things in a new way” or implementing new innovations.
