Economist at the North West University (NWU) Daniel Meyer, says the country’s economy is still in a critical state despite inflation for the April month slowing down from 4,5% in March to 4,4% in April, to the surprise of many analysts following several months of fuel hikes. Inflation figures – defined as the rate at which prices increase over time - were revealed by Statistics South Africa (Stats SA) a week before the country’s economic growth figures are released. 

Meyer says South Africa’s current inflation rate remains an indicator the country’s economy is contracting. He predicts that next week, when Growth Domestic Product (GDP) figures for the first quarter are released, they will reveal what he deems to be a “big” negative growth. Meyer explains South Africans are still going to be hard hit by increasing petrol and electricity bills. 

He says in South Africa we have cost inflation not demand inflation. “It’s not the demand from consumers that’s driving inflation.” He reiterates that the 4,4% inflation rate remains a sign the country’s economic challenges are far from over.

Meyer’s assertions are in stark contrast to those of economist and academic, Roelof Botha, who last month gave a hall full of Free State business owners at Leopards and Lace in Bloemfontein hope regarding the country’s economy post-elections. Botha told the small business owners to give it another 18 months from May for the country to see a turnaround. While Botha acknowledged and addressed some of the major concerns like radical land reform, which he called “land expropriation without comprehension”, persistent political uncertainty, and rigid labour legislation, the economist’s optimistic view is that President Cyril Ramaphosa will finally be able to turn the ship around. South Africa has reportedly not seen economic growth above 2% since 2013.

This while the country’s unemployment figures for the first quarter hit a near 15-year high, increasing to 27,6% in the first quarter of 2019, placing more pressure on Ramaphosa to introduce tough economic reforms to improve the country’s sluggish economy.

OFM News