These 4 graphs sum up South Africa’s massive economic challenges
Bloomberg has released four graphs which break down the economic challenges South Africa is currently facing as President Zuma prepares to deliver his State of the Nation Address.
According to Bloomberg, the address comes at a time when unemployment is at the highest in 13 years; economic growth in 2016 was the slowest since a recession in 2009; and the country is struggling to retain its investment-grade credit rating.
The news group based its graphs on a combination of data collected from Statistics South Africa, the International Monetary Fund and the Reserve Bank as well as through predicted analysis from some of South Africa’s top financial experts.
Economic Slump
Bloomberg cited the central bank’s 0.4% economic growth estimate in 2016 as a serious factor for President Zuma to consider when giving his address.
Despite the low growth likely being caused by the continuing drought, weak demand from the nation’s main export partners and low commodity prices, Bloomberg also noted that political infighting had also cast a shadow over the state’s efforts to boost confidence and growth.
Political Turmoil
Bloomberg noted that President Jacob Zuma and Finance Minister Pravhin Gordhan have been at loggerheads since his reappointment to the Treasury in 2015, with their battles repeatedly making an impact on the economy.
High unemployment rate
Unemployment in South Africa increased to 27.1% in the quarter through September 2016, the highest since 2003, according to data from the International Monetary Fund.
38% of people between 15 and 34 are unemployed highlighting the economy’s skills shortage while poverty levels and anger over rising tuition costs have led to violent protests by students.
Credit-Ratings Risk
South Africa’s economic fate has seemingly been at the whims of three credit ratings agencies over the past year.
Bloomberg notes that while S&P Global Ratings and Fitch Ratings Ltd. kept their assessments of the nation’s foreign-currency debt at one level above junk late last year, and Moody’s Investors Service’s assessment is one step higher, there is still a chance that South Africa’s debt will be downgraded this year.
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