To read the full version of this content please select one of the options below:

South Africa policy cracks complicate economic plans

Thursday, June 13, 2019

Subject

South African reform dillemmas.

Significance

The rand dropped to eight-month lows last week amid conflicting signals from the ruling ANC on changing the mandate of the South African Reserve Bank (SARB). This followed news of the worst first-quarter economic decline in a decade. Renewed question marks have been raised over President Cyril Ramaphosa’s ability to gain consensus on economic policy and to provide the policy certainty that investors desperately seek.

Impacts

  • The 27.6% unemployment rate (over 50% for young people) will likely edge higher, providing fertile ground for social protest and crime.
  • Weakness in the rand could re-ignite concerns about inflation, making an interest rate cut less likely this year despite weak growth.
  • The government's reluctance to put South African Airways into business rescue may force it to try to bring in a strategic equity partner.
Expert Briefings Powered by Oxford Analytica
Stay up to date
Sign up to the Expert Daily Briefings email alert and receive up-to-the-minute analysis of global events as they happen.
*If your university does not have access to Expert Briefings, visit our information page to find out more.