News -- Do or die: the stark choice facing SA economy in 2015

Despite the proposed development plan, which aims to increase employment rate, the country needs to work harder on its infrastructure, because power shortage will disrupt economic activities and lower investors’ confidence in the country. The country faces problems of high government borrowing, deteriorating infrastructure, high unemployment and crime rate. Yet no government actions have been taken. Practical polices have to be put in place in order to save the country from a possible economic downturn in the coming year.

Read more: Do or die: the stark choice facing SA economy in 2015

2015: NOW OR NEVER ?

Major warnings from analysts have shaken South Africa's economy, particularly on investor's prospects. Times LIVE news' quoted that "unless real structural changes are implemented, there is not much chance that 2015 will be better". 

The economist, Iraj Abedian, emphasised that , "Unless substantive changes are made to the broader public policy approach, away from the current statist framework, South Africa can expect not only more power outages and disruption to economic activity, but also more loss of investor and citizen confidence in the ability of the government to deal with the key structural problems facing the country."

The fact that South Africa's slow economic growth of 4.5% from 2002 to 2008 is caused by the inability of it's government to deal with structural issues and difficult global economic conditions; High government borrowing, deteriorating infrastructure, high unemployment and crime also soured international sentiment has been the major concerns.

Take The National Development Plan; While the vision is to establish infrastructure and regulatory frameworks to ensure 24 million people to have jobs by 2030, there is no significant action that has been implemented.

"The average growth for last year is 1.4% - almost half the initial estimate of 2.7%. This happens after platinum and manufacturing strikes put a brake on the economy. In November, ratings agencies Fitch and Standard & Poor's granted South Africa a stay of execution, keeping its credit rating unchanged. Moody's, however, downgraded it one notch to Baa2, just two above "junk status."Nomura's Peter Montalto said more downgrades were possible in 2015, but it depended on the sort of budget that Finance Minister Nhlanhla Nene delivered in February. He said that the coming year could be a landmark year when "self-inflicted policy errors" could change South Africa's economic fortunes.A growth fillip is expected this year, with the National Treasury and Moody's saying that GDP growth would likely swing upwards to about 2.5%.Montalto agreed that growth could head towards the 2.4% mark, but he said this was based on the assumption that there would be far fewer strikes this year than last.Still, Montalto warned that employment growth would probably disappoint, averaging at best about 50000 new jobs per quarter. On the plus side, however, the power situation was likely to improve as part of Medupi came on stream.Some are more optimistic. Scenario planner Clem Sunter said South Africa could even push growth beyond 3% this year - but only if the ANC government heeded certain resolutions, including cracking down on corruption and curtailing excessive spending."

As Purple Capital chairman Mark Barnes said, "We are at a point where, if the decay continues much further, it could become impossible to repair. But there is a lot worth saving and I think we are approaching a turnaround point."

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