SA must restructure economy - MauldinComment on this story
Johannesburg - South Africa must recognise that it had to restructure its economy and it could not afford to put off restructuring any longer, renowned US financial expert and economics author John Mauldin said yesterday.
Its trade and government’s budget and current account deficits levels were worrying and if this was not corrected, the country’s currency would take a further knock as Western economies reached the end of their hard times.
During a seminar on the future of finance hosted by Glacier by Sanlam, Mauldin said South Africa needed to restructure its economy in far more significant ways than it had done in the past five years.
His sentiments came at a crucial time when South Africa has just been surpassed by Nigeria as the largest economy in Africa.
Mauldin, the widely followed economics commentator whose best-selling economics literature in the US has turned him into a financial celebrity, said South Africa would have to aggressively restructure its trade dynamics and financial relationships with the rest of Africa. However, it would have to start at home.
“You are going to figure out how you are going to bring your trade deficit under control. You cannot continue the massive trade deficit that you are running without having consequences. There are no easy answers,” Mauldin said.
In November last year, South Africa recorded its first trade surplus in almost two years after including some of its neighbouring trade partners that were not included in the trade data before.
But in January it slipped back into a deficit of R16.93 billion. In February, it returned to a surplus but the trade balance would have recorded a trade deficit of R6.54bn if trade with Botswana, Lesotho, Namibia and Swaziland were excluded.
Mauldin said that not only had South Africa failed to strengthen its trade with the continent but the country had wasted the past five years instead of capitalising on its potential as a gateway to the rest of Africa when Chinese investments began flooding in.
“But you can always start from where you are. You can’t go back and say we wish [President Jacob] Zuma was more proactive five years ago.”
With elections coming up, he said now was the best time to engage the country’s political leadership about making outward-looking changes if South Africa wanted to compete in the global market.
He added that South Africa had run out of time for populist policies. - Business Report