Market research firm Intellidex has published a new report highlighting the impact of load shedding and other recent developments on South Africa’s economy and projected growth.
Head of Capital Markets Research at Intellidex, Peter Attard Montalto, said that load shedding, SAA, fiscal deterioration and ratings are not enough of a threat or a shock to a faster pace of reform within a capacity-constrained state.
“As such growth forecasts have fallen since the last reform tracker update even though notional the reform outlook has improved marginally,” he said.
“We now see growth at 0.4% this year, 1.1% next year then 1.5% for 2021 and 1.9% for 2021 (from 0.6%, 1.5%, 1.7% and 1.9% previously) – but with strong downside risks still to these numbers.
“With load shedding now this year could easily fall 0.1% and if load-shedding continues, next year by 0.5% or so.”
Ramaphoria is dead
Montalto said that load shedding is not the only major issue facing South Africa, adding that a lack of a large enough team of effective implementers or communicators around the president means that what slow positive change is occurring is getting rapidly lost.
Similarly, negative reforms and delays continue to glue business sentiment to the ground, he said.
“Load shedding is similarly obscuring the slow progress (indeed offsetting it) whilst questions over the future of SOEs and the crisis around both SAA and Eskom and fiscal worries are similarly dampening the mood as attention focuses on the downgrade to come next year if progress continues to fall short.
“Overall it seems not only is Ramaphoria dead – it was never alive, and the long arc of reform potential is being lost in the discourse.”
It is for precisely this reason that Intellidex has always argued reforms in South Africa needed to be much faster, Montalto said.
“All this is causing business to increasingly give government and the President short shrift on social compacting navel-gazing.”
