South African company executives named domestic economic uncertainty the top economic challenge affecting business for a sixth straight year, according to a sentiment index compiled by the Institute of Directors in South Africa.
While the poll of 480 directors from the private, public and non-profit sector and small and medium-sized firms took place Jan. 25 to Feb. 19 – when authorities tightened coronavirus restrictions amid a second wave of infections – economic conditions were consistent with pre-pandemic perceptions, the group said.
Gross domestic product grew an annualized 2% in the three months through June from the previous quarter, according to a median of 10 economists’ estimates in a Bloomberg survey ahead of data released next week.
That coupled with deadly riots, looting and arson that erupted in July, will weigh on the recovery of an economy that contracted the most in at least 27 years in 2020.
Even before the pandemic, South Africa was stuck in its longest downward cycle since World War II and the economy hasn’t grown by more than 3% annually since 2012.
The government has formally adopted five blueprints to boost GDP growth and job creation since the African National Congress won the first all-race election in 1994. However, most of the policies have been stalled by powerful vested interests.
Some reforms proposed two years ago in a National Treasury policy paper, forecast to lift growth by two to three percentage points, and the Economic Reconstruction and Recovery plan unveiled by president Cyril Ramaphosa in October to revive the economy after virus-induced damage, are only now starting to show progress.
These include getting electricity from independent power producers and steps to ease congestion at ports.