Blue Quadrant Research Team 0 comments Market Insights
Supply-side structural constraints, such as a persistent power deficit and a fractious labour environment, will constrain the country’s ability to expand export capacity
Current government policy favours substantial state involvement in the economy. Ill-conceived social policy and high-levels of rent seeking activity will also continue to result in substantial capital misallocation.
These dynamics will ensure that the country’s two key economic imbalances, namely the fiscal and current account deficits, will remain large and entrenched as a feature of the country’s economic fundamentals.
A depressed commodity price environment, with the exception gold, and higher energy prices will lead to a deterioration in terms of trade, and create additional external headwinds for the economy.
Rising global interest rates and a reduction in US Dollar liquidity will make it difficult for South Africa to fund its current account deficit resulting in a sustained depreciation in the currency.