‘Local economy expected to remain in a precarious position’

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The local economy is expected to remain in a precarious position this year as a result of the uncertainty brought about by elections, and the continued structural constraints on the economy. Some experts put economic growth for this just above 1%, too low to create meaningful jobs and to solve socio economic challenges.

2024 is an election year in South Africa and economists say this will cause uncertainty until a new government is formed. The uncertainty will likely dampen investor confidence, adding to the challenges brought about by the electricity supply constraints and inefficient logistics.

Visiting Professor at the Wits Business School, Jannie Rossouw says this will lead to a lackluster economic performance this year.

“In the period up to the elections there will be a lot of uncertainty and there after a new government will have to be formed. So unfortunately 2024 will again be a year of low investment in SA, as a result of that economic growth will not accelerate very rapidly and therefore poverty and unemployment will remain a major problem. We can only hope that the election date is announced earlier rather than later so that businesses can start to plan accordingly and try and do their best to get the SA’s economy to a much needed higher trajectory.”

It’s also believed that inflation could come down to within the Reserve Bank’s target bracket of 3 to 6% which could see the Central Bank cut rates in the second half of this year.

“We see economic growth at 1.6% for South Africa and then we are seeing inflation to drop in the second quarter of 2024 and then we expect the Reserve Bank to cut the repo rate from July MPC. I think the risk that we see in SA is going for an election year, there will be a lot of confrontation that has to take place because of elections and then you’ll find opposition having strengthened so much, having a position. So such are issues from electoral competitive confrontation. We are expecting such probably to be managed better and then we experience free and fair elections, other than that I don’t think SA will have a bigger risk other than the elections. The other global risks will probably be minimal and manageable but elections are the main part that SA will need to manage.”

Economists say while the risks to the economic outlook remain elevated this year, economic prospects will be determined by progress made in terms of resolving structural impediments.