Zuma Left South Africa on an Upward Growth Path
While the “Ramaforia” continues in SA following the renewed positive sentiments and increased investor confidence due to the election of president Cyril Ramaphosa, yesterday’s release of GDP figures points to the fact that Zuma left SA on a positive upward growth path.
According to Stats SA, the economy expanded 1.3 percent last year, exceeding the National Treasury’s forecast of 1.0 percent. The annualized growth in the three months through December was the most since the second quarter of 2016 and fixed capital formation expanded after three quarters of contraction.
This suggests that while the ‘Ramaforia” continues, positive confidence was already being instilled in the economy by the former president Zuma. In sum President Ramaphosa has inherited an economy already on a positive growth path.
While the state capture project and other poor policy decisions of the former president Zuma hurt the economy, and resulted in ratings downgrades, last year’s growth figures is a plus and serves to stimulate investor confidence.
There is even greater hope for the South African economy to do better given the fact that the president Ramaphosa is loved by the markets. The ANC led government has in the past weeks shown that they are serious to act on corruption and to increase investor confidence- in sum “they have been making the right noises”. Howe ever, only time will tell whether this momentum can be sustained and whether President Ramaphosa can truly translate this talk into actions that will grow the economy further to rates above 2 percent and to get many South African to work.