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JOHANNESBURG — Counting the cost of a Zuma presidency, trader Dwaine van Vuuren spells out just how bad a state the South African economy is in right now. After recently having had the dubious title of being the only economy in the world in recession, South Africa managed to escape the negative-growth zone by the skin of its teeth. But the country is still woefully underperforming. Van Vuuren points out that South Africa now has the third worst GDP growth rate in the world. For a developing country, this just isn’t good enough, especially amid the backdrop of a global economy that is picking up steam. South Africa is growing slower than Greece, a country which experienced a complete economic meltdown several years ago. It’s not a good sign, but with growing economic pressure, the chance for political change will become higher. Roll on 2019. – Gareth van Zyl
By Dwaine van Vuuren*
SA is now counting the cost of her economic and political folly, having dramatically decoupled from robust global economic growth and sadly, even worsened her economic performance compared to the rest of the world.
Our 14th June 2017 article “SA only economy in world in recession” was used in a 23rd June parliamentary debate:
We responded to the aid of MP D Carter in our “Here are the facts President Zuma“. At the time SA was the 4th worst growing economy over the last 4 quarters.
Sadly, despite posting one positive quarter in 2Q17 to emerge from a technical recession, SA has now dropped to third worst growing economy over the last 4 quarters.
This is not just a snapshot of a once-off problem. It’s a clear and persistent decoupling of SA to the global and emerging market economies, as shown below:
SA’s decoupling from the global economic boom (you know we are in one, right?) is most aptly represented when one looks at Emerging Market inflows, which are projected to reach $1 Trillion in 2017. The money is flowing into growing developing markets of which SA is clearly not qualifying due to lack of growth. And here is the direct cost of the mismanagement of our economy:
Let’s look at SA in terms of bonds and stocks to get the full picture:
If we can’t recognize this as a voting of the proverbial feet to our economic and political folly then nothing will.
Annual outflows peaked at R100Bn in the 2008 great financial crises that our government so loves to blame on our ills but in reality, annual outflows recently peaked at almost double that, around R181Bn.
It’s not rocket science what needs to be done to fix the economy and hence our horrendous unemployment. It’s all been talked about, debated and agreed. Even policy documents have spelled out what needs doing. But for some reason we seem stuck in a state of paralysis, making no progress at all. It’s a crying shame that we are not capitalizing on a global economic recovery windfall to redress our sorry state of affairs. We’re long on talk, late on strategy and woefully short on execution.
- Dwaine van Vuuren has a BSc(Hons) degree majoring in Computer Science and is a full-time trader, global investor and stock-market researcher. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT and PowerStocks Research into companies used by hundreds of hedge funds, brokerage firms, financial advisers and private investors around the world. He now also heads up retail-side research at Sharenet. An enthusiastic educator, he will have you trading and investing with confidence & discipline.