The 2.9% economic growth rate for 2017 predicted by President Jacob Zuma at the ANC’s 105th birthday celebrations last weekend has been rubbished by economists.
“It is nonsense,” Dr Andre Mellet said bluntly on Monday. “It is totally impossible.”
He noted that the Reserve Bank and National Treasury, which implement fiscal policy, had only predicted growth of a little over 1%. Mellet, who has a doctorate in monetary economics and is an economics lecturer at the Vaal Triangle campus of North West University, said he had criticised the ANC recently for being long on promises but short on plans.
“This is worrying because [Zuma] did it again last weekend, promising the ANC would focus on economic transformation. Then it hangs in the air; what does he mean by that, what does it boil down to? Now they come with a high growth rate, but they don’t say how they’re going to do it,” said Mellet.
Economist Mike Schussler, founder of Economists.co.za, said recent rains might help bump up South Africa’s growth a bit in the agricultural sector, but as it only formed 3% of the country’s gross domestic product, that was unlikely to have a major effect.
“In the forecasting game, anything is possible, but 2.9% does sound optimistic,” Schussler said.
He said that for South Africa to achieve high growth, government needed to inspire confidence in business, which didn’t necessarily include making promises of a growth rate nobody knew the origins or basis of.
“People are getting more optimistic and the 2018 forecast is 2% and 2.2% in 2019,” said Schussler, adding he also had no idea where the 2.9% came from.
He said government could create confidence by being friendly to investors and business and sending out consistent messages.
“More interaction with the successful countries of the world over the years, such as Japan and the United States, and fewer threats, such as talk of nationalisation which has been allowed to continue, will make business more comfortable,” said Schussler.
He added that lengthy strikes were also a problem, as a one-month strike could destroy up to four months of profit.
“If government implemented everything that was agreed upon across all sectors and looked after the interests of business, reduced the cost of doing business, legislation and red tape – all these things would go a long way towards inspiring investor confidence,” Schussler said.
Zuma said at the weekend the ANC “must use the levers of state power to transform the economy and improve the lives of our people” and use “government incentives, procurement, infrastructure investment and other measures to create new industries and expand existing industries”.