There is certainly no shortage of tough issues for South Africans to deal with at present. Economic growth has been in its longest declining cycle since 1945 and the question now is whether South Africa is heading for another technical recession.
The consumer continues to reel under the burden of higher administered prices, the VAT increase and rising fuel costs. At the same time, state-owned enterprises (SOEs), including SAA, the SABC and, most importantly, Eskom, which has just been granted a further R59billion bailout over the next two years, are putting the country’s fiscus at severe risk.
Coupled with lingering structural issues, we believe that South Africa will struggle to achieve growth above 1percent this year and we expect this figure to be closer to the 0.7percent level instead. It’s hard to see any light at the end of the tunnel.
And while President Cyril Ramaphosa came to power on the promise of a New Dawn for South Africa, by mid-August he will have been in the position for 18 months and we have still seen little by way of implementation that would lead to a reversal of this situation.