EDITOR'S NOTE

Opportunity ahead

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Wild mood swings in a person unsettle their fellows, which isn’t surprising: human beings prefer stability to chaos, on the whole, and are unsettled by what they cannot with reasonable certainty predict.

This applies to economies as well. In South Africa’s case, last the economy looked set for a full-blown psychotic episode, but now, whatever pills the doctor has prescribed appear to have taken effect. This diagnosis is confirmed by the ruling on 23 March by ratings agency Moody’s that South Africa’s BBB rating remains – and the economic outlook has shifted up a gear from negative to stable. These terse words belie the tremendous significance of this decision: South Africa has staved off a credit downgrade to sub-investment grade, which would more than likely have sunk the economy as we know it. This, in turn, has created cause for cautious confidence on the part of business and consumers. There is now time for President Cyril Ramaphosa to attract investment through the implementation of what will hopefully be market-friendly policies. Further positive signs, as reported by FocusEconomics: “In February “manufacturing output expanded for the fifth consecutive month, and growth in retail sales accelerated in part due to a stronger currency. The manufacturing PMI remained positive in March, expanding for the second straight month following a string of uninterrupted contractions since August 2017.” Growth expectations are 1.9% for 2018 and 2.0% for 2019.

Incredibly, this renewed sense of optimism is occurring despite the staggering losses incurred by certain monolithic state-owned entities, whose demands on the public purse seem to know no limit. The cash-gobbling vanity exercise known as SAA, for example, is demanding loans of an order that could finance the water infrastructure needs of the drought-stricken Western Cape. Just imagine the prosperity that would ensue if this state of affairs were turned around. The architect of this reversal would go down in history as a hero of the people.

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