Foreign investment accelerating at a faster rate than GDP

The highest FDI numbers in five years were recorded in 2018. The last time we saw such a spike was in the early 1990s, an era renowned for the opening of the SA economy. Picture: Shutterstock

The highest FDI numbers in five years were recorded in 2018. The last time we saw such a spike was in the early 1990s, an era renowned for the opening of the SA economy. Picture: Shutterstock

2018 saw the highest foreign direct investment numbers in the last five years, a much-needed encouraging fact against a rather dismal backdrop.

South Africa’s economic environment is awash with grim news – from disastrous growth of -3.2% in Q1 2019 to an unemployment rate north of 27% – but could there be the initial hint of good news on the horizon? There is certainly no shortage of tough issues for South Africans to deal with at present. Economic growth has been in its longest declining cycle since 1945 and the question now is whether South Africa is heading for another technical recession. The consumer continues to reel under the burden of higher administered prices, the value-added tax (Vat) increase and rising fuel costs. At the same time, state-owned enterprises (SOEs), including SAA, the SABC and, most importantly, Eskom – which has just been granted a further R59 billion bailout over the next two years – are putting the country’s fiscus at severe risk. Dismal backdrop Coupled with lingering structural issues, we believe South Africa will struggle to achieve growth above 1% this year, and we expect this figure to be closer to the 0.7% level instead. It’s hard to see any light at the end of the tunnel. And while President Cyril Ramaphosa came to power on the promise of a New...


 


 


 

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