- President Cyril Ramaphosa has brought renewed optimism about the future to millions of South Africans
- PwC economists see a 75% chance of improved economic growth over the next 5 years
- Ramaphosa has a 10-point plan to help South Africa
President Cyril Ramaphosa’s election to the presidency has brought back hope and optimism about the future to millions of South Africans.
South Africa has like many emerging markets experienced a steady economic decline since 2014. This coupled with near record levels of unemployment and an administration which seemed intent on inflicting self-damage very nearly brought the economy to its knees.
Economists at PwC are hopeful that the worst is behind the country and say there is a 75% chance of improved economic growth over the next five years with Ramaphosa at the helm.
Briefly.co.za discovered that PwC has compiled a list of five possible economic futures for South Africa under the leadership of Ramaphosa.
1. Worst-case scenario – Probability 5%
Reforms - early success with reforms at state-owned enterprises (SOE’s), progress is limited as the administration shifts focus to the 2019 election.
Economic growth - Limited reforms mean GDP growth remains pegged at one percent.
Exchange rate - Continued decline in competitiveness sees the rand fall to an average of R18.20 to the dollar by 2022.
Elections - Removal of Jacob Zuma continues to hurt intra-ANC relations, the party loses its overall majority.
2. Downside - Probability 20%
Reforms – Early gains with state capture probe and SOE’s, progress hampered by focus shifting to populist policies.
Economic growth – Populist policies limit economic growth to 1.5%/
Exchange rate – Rand loses further value as South Africa is seen as politically risky coupled with low productivity growth. Estimates put the rand at R16.90 per dollar in 2022.
Elections – Populist policies help the ANC secure slim majorities in the 2019 general election and the 2021 municipal elections.
3. Baseline – Probability 50%
Reforms – Ramaphosa’s 10-point plan and new deal lead to job creation being the main priority early on which leads to an overall stronger economy.
Economic growth – Reforms propel growth to 2% by 2020 and 3% by 2022.
Exchange rate – Influx of investment and export growth help support the rand to an average of R15.60 to the dollar in 2022.
Elections – ANC ends declining support and increases majority in Parliament. The National Assembly embarks on a new era of improved service to the country.
4. Upside – Probability 20%
Reforms – Ramaphosa’s 10-point plan and new deal goals are achieved, which leads to a boom in the job market.
Economic growth – The improved political and economic climate leads to growth exceeding 4% by 2022.
Exchange rate – Growing exports and strong investments help the rand to an average of R14.50 to the dollar by 2022.
Elections – Ramaphosa’s success with the economy leads to a significant upswing in support for the ruling party at the ballot box. ANC easily secures an overall majority in Parliament.
5. Best-case – Probability 5%
Reforms – Ramaphosa’s new deal and 10-point plan goals are achieved along with the successful turnaround of SOE’s and other reforms not yet tabled such as labour market reforms.
Economic growth – Growth exceeds 4% by 2022.
Exchange rate – Foreign investments and increased manufacturer exports support rand to an average of R13.30 to the dollar in 2022.
Elections – ANC increases majority at the 2019 election as voters flock back to the ruling party.
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