Lee Yandra Paulsen
Economists predict a difficult year ahead as South Africa faces an unresolved energy crisis, logistics bottlenecks and an impending general election. Economist Daywi Ruet reveals the economic outlook for 2024.
Mr. Ludt highlighted the international context, noting the potential impact of the conflict in the Middle East and Ukraine on variables such as oil prices. “South Africa is a small, open economy and whatever happens internationally will have a big impact on us,” he warns.
But Ruudt sees global inflation improving and expects international central banks to cut interest rates. He believes this trend will have a positive impact on South Africa and reduce inflation concerns. Ruudt expects the South African Reserve Bank to respond by cutting interest rates.
On a hopeful note, Root predicts a slight decline in fuel prices, which could have a positive impact on inflation and subsequent interest rate cuts. Nevertheless, difficulties are expected in the upcoming budget speech by Finance Minister Enoch Godongwana.
Rudt outlines the dilemma faced by ministers faced with unsustainable fiscal balances and national debt. He “must start either cutting state spending or raising taxes,” Root argues, acknowledging that both options are difficult. Failure to address these issues could lead to a financial crisis, he warns.
Complicating matters, South Africa is holding elections this year, making it difficult for politicians to make difficult decisions that could sway voters. Ruudt expects the government to take a cautious approach in addressing fiscal concerns. Meanwhile, the private sector is taking a wait-and-see attitude, anticipating possible changes in government and policy after the election.
Political uncertainty tends to lead to lower economic activity, Ruto said. He expects economic growth to be limited due to factors such as ongoing power issues. Although there is potential for some growth, Ruudt warns that South Africa's economic expansion is limited to around 1%.
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