|
Related Topics |
|
The South African Reserve Bank (SARB) calculates and publishes leading, coincident and lagging business cycle indicators with the aim of providing policy makers, economists and the public at large with an idea of where future and current economic conditions are heading.
|
|
Lackluster growth in South Africa's business cycle indicators
While the leading, coincident and lagging business cycle indicators calculated by SARB are made up and contains different economic variables to derive each of the indicators, the stories they tell are pretty depressing, unfortunately. South Africa's economy has just exited its second recession of the last couple of years. And this while other economies such as the USA, China and India are charging ahead with growth rates that puts South Africa's 3rd quarter 2018 growth of 2.2% to shame.
South Africa's economy has been stuck in a rut for years. With it spinning its wheels while other forge ahead. Poor policies, poor implementation of policies, corruption (and state capture), fruitless and wasteful expenditure of government departments, provincial and local municipalities and not even talking about state owned enterprises. State owned enterprises (SOE) has been a drain and a drag on the South African governments finances for years, with Denel being bankrupt, SANRAL (who proudly brought us E-tolls) cannot pay their bills.
ESKOM who can barely keep South African lights on wants government to take R100 billion of their debt off their books. ESKOM hasn't done proper maintenance on power stations for years, buys cheap inferior coal, massively over staffed and pays their staff way to much. South African Airways (SAA) the national airline has been suffering for years (especially under Zuma cronie Dudu Myeni who was the chairperson of the carrier). Its a shock for South Africans if SAA does not need a bailout every year to keep them afloat. PRASA, the passenger railway agency has been involved in dodgy tenders for locomotives. All of the above means money government was planning on stimulating the economy, helping out the poor, improving its own finances, paying for infrastructure development has been diverted towards bailing out SOE's that has been manage poorly for ages as the ruling party deployed cadres instead of skilled personal to run them. A decision that has and will continue to hurt South Africa and its economy for years to come.
So taking all of the above into account it is no surprise the business cycle indicators for South Africa in the graphic below is not shining brightly.
South Africa's economy has been stuck in a rut for years. With it spinning its wheels while other forge ahead. Poor policies, poor implementation of policies, corruption (and state capture), fruitless and wasteful expenditure of government departments, provincial and local municipalities and not even talking about state owned enterprises. State owned enterprises (SOE) has been a drain and a drag on the South African governments finances for years, with Denel being bankrupt, SANRAL (who proudly brought us E-tolls) cannot pay their bills.
ESKOM who can barely keep South African lights on wants government to take R100 billion of their debt off their books. ESKOM hasn't done proper maintenance on power stations for years, buys cheap inferior coal, massively over staffed and pays their staff way to much. South African Airways (SAA) the national airline has been suffering for years (especially under Zuma cronie Dudu Myeni who was the chairperson of the carrier). Its a shock for South Africans if SAA does not need a bailout every year to keep them afloat. PRASA, the passenger railway agency has been involved in dodgy tenders for locomotives. All of the above means money government was planning on stimulating the economy, helping out the poor, improving its own finances, paying for infrastructure development has been diverted towards bailing out SOE's that has been manage poorly for ages as the ruling party deployed cadres instead of skilled personal to run them. A decision that has and will continue to hurt South Africa and its economy for years to come.
So taking all of the above into account it is no surprise the business cycle indicators for South Africa in the graphic below is not shining brightly.
The year on year growth rate in the leading indicator for October 2018 is at its lowest level for the period under consideration (which is from January 2017). This is not a good sign for South Africa's 4th quarter 2018 economic growth figures as the leading indicator is usually the most optimistic of the three business cycle indicators but with it sitting at 0.2% year on year growth it doesn't bode well for growth in the last quarter of 2018. And add to that the fact that load shedding is back in full force we are pretty worried about South Africa's growth rate in the 4th quarter of 2018.
Over the last couple of months all the indicators have shown very poor growth and this coincides with even the National Treasury and the South African Reserve Bank revising downwards South Africa's economic growth. South Africa needs a serious change in its economic course as it cannot continue stumbling around while others advance, as it means South Africans are getting left further and further behind in a time it needs to move forward rapidly to reduce its high levels of unemployment.
Over the last couple of months all the indicators have shown very poor growth and this coincides with even the National Treasury and the South African Reserve Bank revising downwards South Africa's economic growth. South Africa needs a serious change in its economic course as it cannot continue stumbling around while others advance, as it means South Africans are getting left further and further behind in a time it needs to move forward rapidly to reduce its high levels of unemployment.