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South Africa’s latest GDP numbers, released by Stats SA earlier in the week, were worse than expected.
The 51% contraction that dominated headlines is a little misleading, but analysts did call the data “an unremitting saga of woe” and a “depression-level event”, so some panic is warranted.
Anybody else keen to stick the boot in, while we’re down? Enter Eunomix Business & Economics Ltd, a Jozi-based political and economic risk consultancy, with a truly damning look at our economic and political future.
Eunomix says that unless South Africa changes its economic model and implements growth-friendly policies, the country “faces a precipitous economic and political collapse by 2030”.
Below from Bloomberg:
Using a range of measures, [Eunomix] forecasts the country will rank near the bottom of a table of more than 180 countries in terms of security, similar to Nigeria and Ukraine, and have prosperity akin to Bangladesh or Ivory Coast. That’s a significant decline from its current position, though it should fare better on governance and welfare measures.
“Bar a meaningful change of trajectory, South Africa will be a failed state by 2030,” Eunomix said in a report.
The reasons for this are two-fold, says the report. Firstly, the apartheid system that created one of the world’s most unequal societies (by some metrics, we are the most unequal society), and then post-1994, the ANC “perpetuated that situation by rejecting job-intensive growth policies and instead raising wages and subsidizing the poor through welfare”.
Less than a quarter of the country is employed, and then along came the pandemic:
The economic impact of recurrent power cuts, rising unemployment and the loss of the last investment-grade rating on South Africa’s debt have only been exacerbated by the coronavirus outbreak.
“The pandemic is the last nail in the coffin of strategic fiasco,” Eunomix said. “The economy is unsustainably narrow and shallow. It rests on a small and declining working population burdened by very high debt and taxes.”
Not exactly a great forecast, is it?
In response to South Africa’s latest GDP numbers, President Ramaphosa outlined a number of steps for economic recovery, which you read here.
[source:bloomberg]
