Frank Blackmore, Lead Economist at KPMG South Africa
In the state of the Nation Address this year I expect the President to begin by referring to some of the wins that came in as far as the country was concerned towards the end of last year. The fact that they remained with the primacy of fiscal consolidation, reduced the inflation rate target to the benefit of all South Africans, had the consequence sovereign debt upgrade and the higher growth rate that’s it was getting.
I think he will also sketch the environment within which this took place – in other words, the geopolitical environment had a lot of uncertain outcomes and then my hope is that he continues in the same vein as we left off in the medium term budget policy statement with intelligent policies to move the country forward and create higher growth opportunities.
With that, I think the fiscal consolidation will probably be mentioned as well as a lot of emphasis on infrastructure development and maintenance in order to underpin that economic growth in future years to come. I don’t think we’ll see too many radical ideas such as nationalisation of the bank, NHI, et cetera, because at this point, we just don’t have the physical capacity for such ideas.
I think we’ll just build on what was said in the medium term budgets policy statement and prepare for the budget speech later this month, which I think will echo the same continuation of that fiscal consolidation and focus on growth but also obviously the social wage and the amount that needs to be done in terms of job creation, in order to alleviate unemployment and poverty in the country.
I think we’ll get progress on the private sector initiatives within certain elements of the logistics sector as well as energy. We’ll have an update on all those areas because they are the ones that are holding us back in terms of growth. So, all in all, I expect a positive sign that will come at the beginning of this year followed by positive budget as well.
