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Real Economy Year Book 2017 (PDF Report)


There is now no question that South Africa’s poisonous political environment is having a toxic effect on the real economy. Despite more supportive exogenous conditions for agriculture and mining, the country has nevertheless descended into its first recession in eight years.


Indeed, the shift from external to internal causes is the key difference between the current recession and the one experienced in 2009. Back then, the economic slump, which resulted in a million jobs being shed domestically, was precipitated by a global financial crisis that had its origins in US’s subprime housing crisis. This time round, the pain is mostly self-inflicted and driven primarily by ongoing political tensions and growth-sapping policy uncertainty.


Arguably, South Africa’s weak economic performance, having entered a technical recession, is now directly proportional to the poor governance across all three spheres of government, as well as the country’s State-owned enterprises. It is a reality that has not gone unnoticed domestically or internationally and is reflected in the low business and consumer confidence numbers, sluggish investment rates, dismal unemployment figures and the recent ratings downgrades.


The “night of the long knives” Cabinet reshuffle of March – when President Jacob Zuma ignored all the obvious perils to the country and the economy and proceeded to remove Pravin Gordhan as Finance Minister – has done untold damage to the country’s credibility.


Most importantly, the reshuffle undermined perceptions of South Africa as a prudent manager of its fiscal balances, notwithstanding the assurances offered by the new Finance Minister, Malusi Gigaba. Secondly, it eroded the already fragile trust between government, business and labour – a trust that had been so painstakingly nurtured back to life by Gordhan in 2016.


The upshot is an economy that remains trapped in a low-growth holding pattern, from which escape to a higher altitude is unlikely in the absence of a fundamental political reset.


That said, parts of the economy continue to show resilience in the face of the political headwinds. Some of this hardiness is reflected in this edition of the Real Economy Yearbook, which confirms the difficulties, but offers insight into those areas where there are signs of improvement. We trust and hope that the information contained in the pages that follow will help you and your business navigate what are undoubtedly very trying times.


Published on: 30 June 2017.

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