President Ramaphosa’s South Africa: 5 possible futures

President Ramaphosa’s South Africa: 5 possible futures

- 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

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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.

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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.

READ ALSO: Maimane confirms he will stand for re-election as DA leader

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Source: Briefly.co.za

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