South Africa’s economic performance under the Zuma Administration was like a car whose two front wheels had gone over the edge of a cliff. Fortunately, the teetering vehicle was a four wheel drive – allowing new president Cyril Ramaphosa to reverse away from a Zimbabwe-type implosion.
With the economy now safely away from the precipice, Ramaphosa needs to get it back onto the road to growth. That’s sure to be a bumpy ride, as we witnessed last week when we heard the SA economy contracted at an annualised rate of 2.2% in the first quarter of 2018.
Worst of the data’s distress flares was the unexpected 24% slump in the contribution from agriculture. On reflection, this is logical. Farming in rain-deprived SA is tough at the best of times, with the return on assets rarely edging higher than a few percent.
When you overlay a well publicised threat of farmland expropriation without compensation, the impact should be obvious. Cyril has a very hot potato to deal with here, something sure to define the early stage of his presidency. As the details within the GDP numbers show, he’s off to a very slow start.
Source: BizNews – The Insider