Economists are divided on whether a coalition government would come up with an economic policy that will change the country’s fortunes.
Chief economist at Efficient Group, Dawie Roodt, gave his assessment. He believes that the South African economy will only worsen under any other coalition government other than that of the African National Congress and Democratic Alliance.
However, independent economist Mandla Maleka believes a coalition government wouldn’t necessarily translate into a change of the economic policy.
Their comments come after the recently released statistics that show that the country’s GDP saw a 0.1% drop between January and March 2024.
Both Maleka and Roodt agree that the drop was significant.
“It doesn’t matter if the economy drops by 0.1% or grows by 0.1%. It’s really academic because this economy is doing absolutely horrible. And we need to grow the economy at least at 13% if we want it to stay in place,” said Roodt.
Government corruption to blame
He said it was unfortunate that the South African economy is unlikely to grow faster. The chief economist blamed this on government. He noted that the main reason for the snail-paced growth was that government caused immense damage with their incompetence. This includes corruption and the erroneous micro-economic policies.
“We as the public, the only thing that we can really do … to get this economy to grow, we have to get the correct political leaders in place. And the guys that we had previously were not good,” said the economist.
“We had an opportunity to vote now and let’s hope we voted for the right guys. But I’m afraid looking at the way most people are voting for ANC, or EFF or MK Party. Those are not the right parties that are going to get the economy growing.”
He said South Africa needed a coalition that was not in favour of more intervention and more socialist kind of policies. In his view, a coalition with the DA would be more favourable in the improvement of the economy. But he believes that it would not be an easy decision to make in political circles.
Coalition with EFF, MK Party will sink economy
Roodt believes that a coalition with the EFF or MK Party would sink the economy.
While the economy drops, the youth further wrestles youth unemployment as the first quarter statistics show that 45.5% of individuals between the ages of 15 and 34 years were unemployed in the first three months of 2024. National results show 32.9%.
Maleka said: “Even when compared to last quarter of 2023, the GDP figures remain poor for the least. But certainly nowhere near employment creating levels.”
He said the ANC’s failure to secure majority in parliament doesn’t suggest a change in policies. This includes economic policies.
ANC’s poor result doesn’t suggest change in economic policy
“So economic policies remain, and would be so for a foreseeable future. Even after coalition government is secured or even minority government. By their very nature, policies take a while to manifest, and the same applies to economic policies.
“Therefore, there is no need to change any economic policies. Even by a long shot, the thought of nationalising the Reserve Bank, won’t happen easily. [Not] under the current political system,” he said.
“Thus monetary policy would remain anchored by inflation targeting. Fiscal policy will remain anchored by balanced fiscal budget preference than any wishful populist policies.”
He was concerned that “our economy has created more social dependents than entrepreneurs. And this will prove to be a disincentive to promote a culture of entrepreneurship”.
