The importance lies in the magnitude of the rise in FDI.
After dipping from 2.3% of GDP in 2013 to 0.5% in 2015, it reached 2.2% of GDP in 2018 (showing more than twice the growth in GDP).
Accelerating at a faster pace than GDP, FDI is set to give renewed impetus to the SA economy. Such investment is normally a leading indicator, with positive economic growth following some three to five years later.
In fact, the last time we witnessed a spike such as that from last year was in the early 1990s, an era renowned for the end of sanctions, the opening of the SA economy and the peaceful election of our first democratic government.
This paved the way for South Africa to experience a decade of very robust economic growth. If this trend continues, and if government can stay on course with reforms, South Africa should benefit from much better growth in the next few years.
Maarten Ackerman is chief economist and advisory partner at Citadel.
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