Tags: South | Africa | President | Economy

South Africa President Tackles Economy

By
Monday, 16 Jun 2014 10:06 AM Current | Bio | Archive

President Jacob Zuma will deliver the state of the nation address tomorrow. Stakeholders in the Republic of South Africa collectively will be paying close attention in light of ratings agencies Standard & Poor and Fitch taking a negative stance on the countries credit rating.  
Fitch revised its outlook on the economy from stable to negative while Standard & Poor dropped South Africa’s credit rating from BBB to BBB-. Both agencies attributed their revised positions to similar contributing factors.
 
Unrest in South Africa’s Labor market. The record five-month strike in the platinum belt as mentioned in my previous blog significantly affected productivity in the mining and quarrying sector and ultimately negative growth in South Africa’s first quarter GDP results. Due to recent developments in negotiations it does seem that the strike is nearing an end.
 
Slow Growth. Growth forecasts have been reduced across the board. The World Bank reduced its forecast from 2.7 percent to 2 percent while Fitch and S&P reduced their forecasts from 2.8 percent to 1.7 percent and 2.7 percent to 1.9 percent respectively. Large account deficits contributing to a weaker rand, high interest rates and tightening of the monetary cycle have been mentioned as some of the hindrances to growth prospects in South Africa.
 
Rolling Blackouts. The countries primary electricity provider government owned Eskom has been struggling to keep up with demand resulting in load shedding. The Manufacturing sector has been hit hardest by this unfortunate lack in service delivery some businesses suffering up to eight hours in power outages a day. However, there is a light at the end of this tunnel as the Medupi power station is ostensibly due to start producing power by the end of the year.
 
The ruling party inspires little confidence. Fitch expressed concerns about the re-election of ministers to Jacob Zumas new cabinet, whose track record fails to provide reason to expect growth in light of “deteriorating trends in governance and corruption” and weak growth.
 
During a radio interview with 567 CapeTalk/Talk Radio 702’s Bruce Whitfield, a director at S&P Ravi Bhatia, said that “It’s more that the ANC government has been re-elected, broadly in the same vein. Basically, they did not manage in the last term to push through reforms that provide growth.”
 
While most of these contributing factors have a life span or a potential remedy in sight many will be looking to the state of the nation address to not only discuss the National Development Plan but to inspire action and perhaps throw the spotlight on the reality of progress made in this regard.
 
Matthew Klynsmith earned a business administration diploma at CTI in Cape Town, South Africa. He now works at Strategic Options as an associate partner. To read more reports from Matthew Klynsmith, Go Here Now.
 
 
 

© 2017 Newsmax. All rights reserved.

 
1Like our page
2Share
MatthewKlynsmith
President Jacob Zuma will deliver the state of the nation address tomorrow. Stakeholders in the Republic of South Africa collectively will be paying close attention in light of ratings agencies Standard & Poor and Fitch taking a negative stance on the countries credit rating.
South, Africa, President, Economy
461
2014-06-16
Monday, 16 Jun 2014 10:06 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved