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Some of South Africa's Economic Rebound Started Under Zuma

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  • Economy expands 1.3% last year, exceeding Treasury’s estimate
  • Fixed investment surged after three quarters of contraction

South Africa’s new president, Cyril Ramaphosa, is credited with boosting confidence in the economy, but some of that rebound started under his predecessor, Jacob Zuma.

The economy expanded 1.3 percent last year, exceeding the National Treasury’s forecast. The annualized growth in the three months through December was the most since the second quarter of 2016 and fixed capital formation expanded after three quarters of contraction.

This “suggests that confidence was returning even before President Cyril Ramaphosa took office this year,” John Ashbourne, Africa economist at Capital Economics Ltd., said in a note. “Today’s figures show that Mr. Ramaphosa was lucky enough to inherit an economy that was already picking up.”

Picking Up Pace

South Africa's GDP growth quickened for first time since 2013

Source: Statistics South Africa

Political and policy instability due to some of Zuma’s decisions hurt investor confidence, curbing the recovery in Africa’s most-industrialized economy and prompting both S&P Global Ratings and Fitch Ratings Ltd. to cut the nation’s debt to junk. Ramaphosa’s election as African National Congress leader in December paved the way for him to replace Zuma as president last month, helping business confidence to climb to the strongest since October 2015 in January and the purchasing managers’ index to return to expansionary territory.

Fixed Investment Surge

Gross fixed capital formation expanded for the first time in a year

Source: Statistics South Africa

Note: Annualized quarter-on-quarter growth

While the growth rate hasn’t exceeded 2 percent since 2013, prospects for this year are looking up.

Within a month of Ramaphosa taking over as ANC leader, the government overhauled the board and top management of struggling utility Eskom Holdings SOC Ltd. After being elected president, Ramaphosa changed the cabinet, removing ministers implicated in corruption linked to the Gupta family, who are friends with Zuma, and reappointing Pravin Gordhan and Nhlanhla Nene, both of whom were fired by Zuma.

“Ramaphosa is taking charge when the momentum of growth seems to be gathering and that could continue for a while longer, purely based on confidence,” Kevin Lings, chief economist at Stanlib Asset Management Ltd., said by phone. “The path that has been elected including the appointment of good ministers in key departments should, despite some policy wrangling and politicking, see us lift confidence and get growth back to around 2 percent on average.”

What Our Economists Say


“South Africa is likely to remain a laggard relative to global growth despite shedding the shackles of the corrupt and dysfunctional government policy of the Zuma era. The new administration will need to make quick and substantial progress in areas such as improving governance of state-owned entities for South Africa to catch up with emerging market peers.”

- Mark Bohlund, Bloomberg Economics -

The National Treasury said last month the economy could expand 1.5 percent this year and growth may accelerate to 2.1 percent in 2020. These forecasts will probably be raised in the October mid-term budget as South Africa overcomes governance and financial problems, Nene said Monday.

— With assistance by Simbarashe Gumbo, and Thembisile Dzonzi

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