South Africa among the Top Five Most Painful Economies to Live and Work in 2015
By Editor Sunburst Africa
It is time for South Africa’s leaders to take decisive steps to promote growth and development in the economy. South Africa’s leaders have spent a lot of time planning and if the is one thing the country has an over-supply of – it is policies and plans. From the Reconstruction and Development Plan (RDP) in 1994, the Growth Employment and Redistribution Policy (GEAR), Accelerated and Shared Growth Initiative (ASGISA), Black Economic Empowerment (BEE), Broad Based Black Economic Empowerment (BBBEE), The Industrial Development Plans, and now the National Development Plan (NDP) among others. Despite government efforts to redress the inequalities of the past and place South Africa on the path of growth and development, economic challenges persist. Inflation remains one of the economic challenges impacting on the growth of South Africa.
According to the late Nobel laureate economist- Milton Friedman, inflation is a disease that can wreck a society. When inflation is compounded with unemployment the outcome and debilitating effect on people is referred to as misery
According to the late Nobel laureate economist- Milton Friedman, inflation is a disease that can wreck a society. When inflation is compounded with unemployment the outcome and debilitating effect on people is referred to as misery.
According to a Bloomberg research, affliction this year will be most acute in Venezuela, Argentina, South Africa, Ukraine and Greece — the five most painful economies in which to live and work. According to Bloomberg survey data that make up the so-called misery index for 2015, the equation is simple : (unemployment rate + change in the consumer price index = misery.)
In Ukraine’s case, war will exact greater economic casualties. Tension with Russia-backed rebels will prolong joblessness in the eastern-European nation, and inflation won’t offer much relief, the surveys showed. The one-two punch means Ukrainian consumers are set to be the fourth saddest among 51 economies (including the euro area) based on forecasts for the misery measure.
Adding to the agony is the relatively abysmal income growth that will fail to cushion Ukrainian households against the still-surging prices. At $8,494 gross domestic product per capita this year, Ukraine only edges out the Philippines among the countries surveyed and measured with the International Monetary Fund’s proxy for resident income.
Unemployment probably will climb to 9.5 percent in Ukraine this year from its 8.9 percent rate as of the third quarter in 2014, the survey data shows. Inflation is projected to rise at a 17.5 percent pace in 2015, compared with the 24.9 percent December year-over-year rate.
The depressing expectations for Ukraine still aren’t quite as bad as what the embattled nation faced in 2014 when it finished second in the misery index. The 2015 projections, dismal as they are, would make Ukraine bright enough to jump past South Africa and Argentina from last year’s misery-index readings.
The three countries that will probably see the most economic misery in 2015 — South Africa, Argentina and Venezuela — haven’t budged much from their 2014 rankings, when they occupied three of the top four spots, the data showed.
At 78.5 percent, the estimated CPI inflation rate in back-to-back, most-miserable Venezuela more than quadruples Ukraine’s inflation rate. The dire shortage of basic goods in Venezuela last week prompted neighboring Trinidad & Tobago to offer a tissue paper-for-oil swap.
Five years after investors popularized the term “PIIGS” to describe a handful of European countries with bloated budget deficits, four of those five countries remain in dire straits, according to their projected misery indexes.
Greece is 5th, Spain 6th, Portugal 10th and Italy 11th in this year’s ranking, though each show about average projected income levels relative to survey peers. (Ireland happily sits further down the chain at No. 16 in the misery ranking and with a much-better-than-average GDP per capita of $48,787. The 51 economies in our misery index average GDP per capita of $31,079.)
South Africa needs to take this news from a glass half-full perspective and proactively take strides to redress this trajectory. There remains huge potential within South Africa to change this trajectory but decisive leadership is needed. We will keep watching and inform our readers on any improvement in this index for South Africa.