2016 was an interesting year all round, from the election of Donald Trump to the US presidency, to the passing of some of the biggest stars of our age, the last twelve months have been a roller coaster of global unease. With the New Year now in full swing, we look to the future to see what this new cycle could bring. Here are a few predictions for South Africa in 2017.
What looks to be a fairly quiet start to the year, thank goodness, however there is expected turmoil later in the year as the ANC’s elective conference draws closer. Seen to be the possible start of a political war in the country, the end of 2017 could be just as unsettling as the end of 2016. With a lot to get through before this stage, the ANC must first face the party’s policy conference, consultative conference as well as the state of the nation address in November. All of these will have a roll on effect, adding fuel towards the December fire.
According to analysts from Nomura, these situations and possible outcomes means weak growth for the country. Although slightly stronger growth than 2016, the uneasy political situation has dwindled hope of any real growth to the economy over the next year. While South African asset prices should perform at an acceptable level, the positive turn is only due to the country being compared to weaker peers like Turkey or Mexico.
As far as interest rates go, it is forecast that there won’t be any cuts as long as the far end of inflation forecasts stays above 5%. The risk of any sharp or drastic rate hikes relies on the perceived weakness of the rand as well as any deterioration over the course of the year. The SARB will most likely only hike rates further if the currency weakens in market value. If this does not occur, the rate should remain unchanged as long as inflation is not kept below 5% at the long end of the forecast.
What is forecast to be a slow recovery, the private sector and any investments there in will be key to have any noteworthy growth this coming year. As it stands the predicted GDP growth is set at around 1% for the year. While double the growth in 2016, it is far from the ideal scenario. With a negative per capita income growth the potential for sliding back down is very real, fueled by potential political unease later in the year.
Due to the reforms to be introduced in 2017, there is definitely potential for a boost to growth over the course of 2017. However because of the uneasy political climate, the chances of this growth showing through are very slim, once again sidelined by the government’s indecision.
With the ANC focused on internal affairs this year, including conferences and tense decisions later in the year. With restriction on the president and a likely reshuffle of his cabinet in the year, policies will most likely be more of a distraction than actual progressive policy.
Having just narrowly missed being cut to junk status in 2016, 2017 still holds a huge risk to this drop. If growth remains slow, we could expect a cut towards the middle of the year – something that could seriously hurt our livelihoods. We could see an immediate cut to junk status if the finance minister is booted, which is what the ANC is currently trying to do.
An interesting time ahead to say the least, 2017 is year to build and grow our diverse country into the beautiful beacon of hope it could be. What do you think of the predictions for South Africa.