Photo by: Reuters
Economist Mike Schussler says South Africa’s economic growth rate will not see a “major improvement beyond 2%, 2.5% for the foreseeable future”.
“I think growth next year, not even depending on who is the president, will be better than this year, but it is not going to shoot out the lights,” he said on Thursday, speaking to Engineering News Online on the sidelines of the Transport Forum in Johannesburg.
“Ultimately next year is a holding year. I’m not saying we are going into a recession, but we are on a growth strike. We are going to struggle to grow fast enough to create enough jobs, which in itself creates a political problem.”
Schussler believed a changing of the political guard within the ruling ANC, with the election battle scheduled for the end of this year, would only have an impact on the economy towards the end of next year, or thereafter.
“Economically speaking, it takes a year to 18 months for interest rates to have an impact, for fiscal policies to have an impact. So what happens in December will have impact more in 2019 than in 2018.
“If you look at our political history we could get a bit of a boost should consumer confidence come up because people feel the crooks have lost. If Cyril [Ramaphosa], Zweli [Mkhize] or Lindiwe [Sisulu] win, there could be a boost. NDZ [Nkosazana Dlamini-Zuma] might not be such a good boost.
“If the wrong person wins - someone aligned with the crooks - consumer and business confidence will not pick up. International investors will care less about us and local investors will invest ever more in other countries. The growth rate will stay subdued.”
Schussler said the direct fixed investment of South Africa at the end of the second quarter this year was over R2.8-trillion.
“Sixty per cent of South Africa’s gross domestic product value is invested in other countries. Most South African companies are now investing outside South Africa.
“Firms no longer think returns in South Africa are worth the risk.”
Schussler added that South Africa had to be seen “to do the right thing”, should the non-NDZ camp win.
“The right thing means people will have to go to jail for what they have done. Not the bit players and side players. I’m talking political players. This will lead to upheaval.
“But, of course, the crooks have much bigger motivation to stay in power than those trying to unseat them. That remains a problem.”
Schussler emphasised that South Africa suffered not only from political problems.
“At this point in time, we have high tax rates and low spending on infrastructure. The quality of our education needs to improve drastically.”