Political Scandals Weighing On Country’s Growth
Political Scandals Weighing On Country’s Growth: SA is under political pressure as the ruling ANC prepares to elect new leaders at its conference in December. There has also been speculation that a cabinet reshuffle is imminent with President Jacob Zuma looking to replace Finance Minister Pravin Gordhan with outgoing AU commission chair Nkosazana Dlamini-Zuma. Dlamini-Zuma is seen as one of the front runners for the ANC presidency. That’s according to a new report by FocusEconomics‚ an international organisation that provides economic forecasts and analysis. Rating agency Standard & Poor’s recently warned that any attempt to undermine SA’s key institutions such as the Treasury would see the country likely downgraded to junk status. “A weak labour market and high inflation took a toll on private consumption and the investment environment was undermined by the political infighting in the ruling ANC party‚” according to the report.
“All eyes are now on the 2017 budget‚ which will be delivered next month [February]. Details on tax increases and the announcement of more restrictive fiscal policy are expected.” On a positive note‚ the report states that a gradual improvement in the world economy and a recovery in commodity prices will support SA’s economy. The reserve this week revised down marginally the growth forecast for 2017 to 1.1%‚ from 1.2%. Reserve Bank governor Lesetja Kganyago said growth prospects remain dependent on uncertain but tentatively improving global conditions and their impact on commodity prices.