Goldman Sachs expects big rebound for SA economy

Goldman Sachs expects South Africa’s economy to grow almost 3% next year, helped by President Cyril Ramaphosa’s reforms and strong global growth.

Speaking to Reuters on Wednesday (3 October), the bank’s sub-Saharan Africa head, Colin Coleman, said that Ramaphosa’s stimulus and recovery plan was a shot in the arm which had encouraged investors by giving certainty on mining and visa rules and by emphasising skills development and education – areas where South Africa lags other African states.

“Part of the reason why Goldman Sachs is quite bullish on our ability to get back to 2.8 percent growth next year and 3.2 percent in 2020 is that the global backdrop is constructive. The two largest economies, USA and China, are doing well,” he said.

However, Coleman acknowledged that Eskom remained a major headache for the government, as it accounts for around three-quarters of its contingent liabilities.

“You’ve got to get a very significant equity injection (into Eskom), and practically it’s unlikely to come from government,” he said.

He added that the struggling South African Airways (SAA) may also battle in finding a potential equity investor.

“Whoever would want to buy it (SAA) would want a balance sheet that is not broken, a restructuring plan that is credible and control to effect the turnaround,” he said.

“You need to have terms which are sufficiently attractive to buyers.”

A Reuters poll of economists published in September saw Africa’s most industrialised economy growing 1.7% in 2019 after sluggish growth of 0.8% this year.

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Goldman Sachs expects big rebound for SA economy