Reactions to President Cyril Ramaphosa’s latest State of the Nation Address continue to pour in, particularly regarding his announcement of a 3% growth target for South Africa.
Source: ChatGPT.
But some economists argue that the SA economy is indeed eventually capable of even much higher economic growth than 3% if the right choices are made.
“The present slow and uneven economic recovery nonetheless illustrates the extent to which accelerated structural reforms are urgently needed if SA is to even reach a 3% GDP growth by 2027,” said economist, Raymond Parsons and professor at North-West University.
“Achieving the socio-economic targets outlined in the Sona will therefore heavily depend on the accelerated implementation of growth-friendly policies and projects, better governance and less corruption at various levels, and ensuring that the country’s vulnerable public finances are properly stabilised.”
Parsons applauded Sona’s urgency around the creation of greater business involvement and faster infrastructure spending for growth.
“Government will need to harness the participation of the business sector on an even a bigger scale to reach much higher job-rich growth. Stricter timelines would be helpful to expedite the delivery of the much higher infrastructural spending emphasised,” he said.
Global economic uncertainty
On the global front, Parsons mirrored Sona’s recognition of the extent to which 2025 is going to be a roller-coaster year of change for many economies, including SA.
“As a small open economy, SA needs to play its cards smartly and, in particular, make its economy as ‘Trump-proof’ as possible.
“SA’s economy needs to remain globally competitive in order to deal with both the risks and opportunities of a shifting geopolitical scenario,” he cautioned, while stressing the extent to which SA’s hosting the G20 this year could achieve this objective given its “big opportunity to ‘showcase’ the SA economy”.
He also praised the advancement and progress made by the GNU to date.
“The overall challenge for GNU policy is now to build on the existing better short-term business confidence and convert it into long-term investor confidence.
“It is elevated investment that enables more growth. A clear and predictable policy environment – as well as a high degree of policy certainty from now on – will encourage business to take a long-term perspective on growth and development in SA.”
