Goldman Sachs: SA growth may surprise while land question has possible upsides

JOHANNESBURG — Goldman Sachs’ latest report on South Africa paints a picture of a country that could emerge stronger than expected out of the Zuma years. Titled “Cyril Ramaphosa’s ‘New Deal‘ for South Africa”, the report says growth may possibly increase past its expected 2.4% level for 2018. But it is the investment bank’s comments on the ANC’s controversial land expropriation policy that is the most interesting. I’ll highlight this quote from Goldman Sachs (which you can read in the full report below): “We expect that the ANC will opt to clarify its position that no constitutional changes are required in order for it to enact its policy in limited circumstances, and we anticipate that the Ramaphosa administration will clarify the conditions under which it foresees pursuing land expropriations. If addressed pragmatically and in ways that work to dismantle the negative spatial legacies of apartheid, we see scope for land reform to contribute positively to economic activity.” – Gareth van Zyl

By Rene Vollgraaff

(Bloomberg) – Goldman Sachs Group Inc. may raise its forecast for South Africa’s economic growth again.

The lender sees risks to its 2.4 percent estimate for 2018 “as being tilted to the upside,” Goldman economist Andrew Matheny said in an emailed note. Goldman increased its prediction from 1.5 percent after Cyril Ramaphosa was elected as leader of the ruling party in December.

Pedestrians walk along a roadway back-dropped by commercial and residential buildings in the Sandton district of Johannesburg on June 22, 2017. Photographer: Waldo Swiegers/Bloomberg

Business confidence reached a more than two-year high in January as Ramaphosa’s ascent to power initially boosted sentiment and the rand following former President Jacob Zuma’s scandal-ridden tenure of almost nine years. The currency has lost some ground against the dollar since reaching a three-year high in February after the new leader changed the cabinet and removed some ministers seen as loyal to Zuma and who are implicated in graft allegations.

Market participants “remain collectively somewhat cautious on prospects for implementation of reforms, given potential pressure from vested interests, political risks and the magnitude of social and economic challenges,” Matheny said. “The market does not yet appear to be pricing in meaningful structural reforms and we see scope for a significant further re-rating higher of growth expectations.”

GS Report on SA’s ‘New Deal’