South Africa Fixed Investment Has Fallen ‘Dramatically,’ Absa Says
- Poor infrastructure and slow reforms bedevil investment
- Firms unlikely to lift spending until conditions improve
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South Africa’s government must make good on its promises to deliver structural and economic reforms aimed at improving infrastructure and bolstering business conditions to revive capital expenditure, according to a report by Absa Group Ltd.
Gross domestic fixed investment in Africa’s most industrialized economy has “declined dramatically” to about 14% of gross domestic product at the end of the second quarter from its peak of 22.7% of GDP in the final three months of 2008, Absa economists Peter Worthington, Miyelani Maluleke and Sello Sekele, said. The data suggest investment spending is largely directed toward maintenance instead of growing productive capacity, according to the Johannesburg-based lender.