Leading economist Professor Raymond Parsons has warned that political uncertainty is growing.
The NWU has published its latest Policy Uncertainty Index (PUI) for the third quarter of 2017, and it reflects a deterioration in sentiment from the previous quarter.
“Hardly any recent economic assessment or media release from international or local financial institutions, business lobbies, economic analysts, financial journalists or credit rating agencies appear without the words ‘policy uncertainty’ occurring in them,” said Parsons.
“The PIU is the net outcome of positive and negative factors influencing the perceptions of policy uncertainty over the relevant period. The results for 3Q2017 show an average index score of 53.6, reflecting a further rise over the PUI of 53.1 in 2Q2017.
“Hence the PUI has edged further into negative territory.”
He explained there are three elements of the index:
– media data, where there was an increase in reporting about ‘policy uncertainty’
– a survey of economists, which has reinforced perceptions about high levels of uncertainty
– The Bureau of Economic Research at the University of Stellenbosch’s latest number on the proportion of manufacturers who indicate that politics is a constraint on doing business in SA.
This is still at a high level of 86, compared with 87 in the previous quarter.
This is how the PUI looks, quarter to quarter, with some of the key development:
“What is there to put on the other side of this rather persistent uncertain and sombre PUI outlook? The global economic outlook is positive, which is good for exporting regions like SA. Institutions such as the SARB and the courts continue to play a robust role in upholding the right ‘rules of the game’ for good governance and stability in their respective spheres of influence. Organised business is being more pro-active and vocal in addressing the socio-economic challenges now facing SA,” Parsons suggested.
“While for the time being, policy uncertainty has become the ‘new normal’ in SA, business strategies can, and must, be adapted to accommodate and address the realities of the situation.
“But it would also be prudent not to assume that the ANC elective Conference in December will necessarily bring the certainty that many stakeholders hope will materialize then, assuming the Conference goes ahead.
“It is not inconceivable that the factional battles currently dividing the governing ANC will not be resolved at the conference and will continue thereafter.”