South Africa: A Month Before 2019 Election, Economy Takes Three Hits in Quick Succession

analysis

They say that the hits that don’t break your back make you stronger. In fact, it’s more likely that the hits that don’t break your back will, in fact, make you weaker. The news is not entirely as gloomy as it seems, but coming just before the election, one thing is for sure: the incumbent government will not be propelled into the election on a wave of a strong economy.

For reasons that are somewhat hazy, but certainly important, the new administration and the new president are not inspiring the economy to rev up. This week, three indicators of very different types underlined that significant development.

On Tuesday, the IMF downgraded SA’s already sclerotic economic growth even more. In its quarterly World Economic Outlook, it cut SA’s growth forecasts by 200 basis points (a 100th of a percentage point) so it estimates 2019 economic growth will be 1.2%, not 1.4%. It also cut 2020 growth by the same amount to 1.5%.

Just to be clear about this, it means SA is poorer because economic growth is slower than the population growth rate. It’s truly dire. To put that in context, consider that this rate of growth is lower than the…

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Author: skvaller

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