Foreign investment, jobs and stellar economic growth all depend on the government of national unity (GNU) which chose a reform path underpinned by mostly centrist economic policies and respect for the Constitution.
While the domestic macroeconomic outlook will be heavily influenced by inflation and interest rates in the United States (US) and other developed markets, the countrys gross domestic product (GDP) growth picture will be influenced by the GNU partners ability to find common ground in diverse areas such as healthcare, international relations, labour and procurement, Arthur Kamp, chief economist at Sanlam Investments, says.
He says besides some rather glaring policy differences, the political alliances formed after the election will face major tests in the coming years thanks to the next round of local elections, likely in 2026 and the 2027 African National Congress (ANC) party elections which will test support for President Cyril Ramaphosa.
If it survives these tests, the GNU could pull the economy from its decade-long doom loop. The negative doom loop derives from the complex interplay of declining foreign capital inflows and infrastructure failures that pushed the countrys real economic growth potential to below 1%, he says.
Under this lower growth scenario, government finances came under significant pressure, further weighed down by rising unemployment and the growing number of citizens dependent on the state for welfare grants.
