Economist article on the South African economy

There is an interesting article on the South African economy in a recent edition of the Economist:

Basically, it says that the South African economy is going very well. However, some people (e.g. trade unions) feel that this growth is not benefiting the poor enough and that the government should be taking more drastic steps.

In this kind of argument I always think of the Kennedy quote: “A rising tide lifts all boats”. I suppose their problem is that not all boats are lifted equally…

Here are some of the interesting excerpts from the article:

  • “When South Africa’s apartheid regime conceded power in 1994, it also bequeathed an economic shambles. The government’s budget was in the red, interest rates were uncomfortably high, and the country’s economy was as distorted as its society. But this fiscal year, for the first time, the government is running a surplus.”
  • South Africa’s economy “has grown by more than 4% in each of the past three years.”
  • “About half the population falls below the poverty line, according to some estimates. And although the economy creates 500,000 jobs a year, unemployment remains stubbornly high.”
  • “Local governments (municipalities) struggle to hire managers and engineers, leaving many essential posts unfilled”
  • Len

    Trouble with the Economist article is that their evidence for the SA economy doing well depends on various indices related to consumer spending (house prices, car sales etc). By redistributing wealth (BEE) accumulated capital is being spent on consumables, instead being reinvested. What happens when the national savings run out? The spending ought to be on infrastructure, like Koeberg or Groote Schuur.