The leadership of South Africa’s Treasury and Reserve Bank believe a return of business confidence could give the economy the necessary boost to realise President Cyril Ramaphosa’s growth target of 3% for 2018.
Finance Minister Nhlanhla Nene on his first visit to the IMF World Bank meetings in Washington since his reinstatement in February says his hit the road running reconnecting with old colleagues and stakeholders as the issue of unemployment in emerging economies has topped the agenda.
The Governor of the Reserve Bank, in his role as chair of the IMF’s powerful policy steering committee, has painted as positive picture of the country’s growth trajectory.
Nene joined ministers and central bank governors from the G20 in closed door discussions where inclusive growth and low levels of job creation in emerging economies were put front and centre.
“Issue of unemployment which we are confronted with as a country and as emerging economies are at the top of our agenda, so inclusive growth becomes part of our agenda collectively and as we move on also, we are beginning to look at what are the key areas where we could actually find each other.”
He warned of headwinds a possible trade war in light of unilateral protectionist policies, managing the national debt at sustainable levels and stabilizing the country’s State Owned Enterprises.
“If you look at Eskom which is our largest in terms of being a heavy drain on the Fiscus in terms of the guarantees but at the same time looking at how the company itself continues to execute its mandate.You now have a new board, new executive and all the people involved in corruption are beginning to face the consequences. All of those things are happening in a short space of time but that’s putting in place the right fundamentals before you move on.”
Kganyago has a positive outlook
This as global growth remains strong which could benefit South Africa’s prospects among other fundamentals at least according to the country’s Reserve Bank Governor Lesetja Kganyago.
“Yes we are growing below the global average, but you know what, we had to revise up our growth of 2016 higher, growth in 2017 surprised even the most optimistic coming out at 1.3%, we now have had an economy that has been growing in excess of 2% for each one off the three previous quarters.”
Business confidence alone has been quantified at around 0.5% in terms of economic growth. Serving also a Chairman of the IMF’s International Monetary and Financial Committee, Governor Kganyago has a positive outlook.
“What had constrained the growth in the economy over the past two or three years had nothing to do with the global economy because the global economy was growing stronger than we had seen.”
With policy makers here more enthused about South Africa’s prospects prompting investors to take a second look.