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As this lowly newspaperman was preparing for the festive season, celebrating the end of the load shedding and toasting the appointment of Josef Zinnbauer at the mighty and ever-glorious Orlando Pirates Football Club, a sobering note landed in his inbox.
It was from an outfit called Emerging Advisors Group (EAG), an influential China-based research and advisory firm.
It was titled: “South Africa is dead. What next?”
The opening summary read thus: “Things have worsened considerably this year for South Africa in terms of real economic momentum, the fiscal balance and growth-adjusted funding costs. And, at this point, the future holds little but further protracted recession, spiralling public debt and endless rand pressures ... As a result, we see nothing to buy here.”
Jolted, the lowly newspaperman dropped his glass and spilt his ice-old cranberry juice all over the floor.
He continued reading: “The past 10 years have been nothing but a relentless deceleration … and as we write today, growth is pretty much all gone. Investment has been contracting outright on balance since 2015, and the consumer has gradually given up as well.
“Regardless of where we look, the engines have stalled.
“And here is the big problem: We do not see how South Africa can grow again. At least, not in the foreseeable future.”
The report went on to explain that South Africa has no prospects of export growth, with revenues significantly lower than they were in 2010/11.
Both export prices and volumes have stopped growing.
“In short, South African exports look ‘done’.”
The report then looked to the rates/growth gap, saying that while the nominal gross domestic product growth has fallen, interest rates and the nominal interest rates are where they were 15 years ago.
Furthermore, the SA Reserve Bank is in a bind because “the only way it can ensure continued funding for South Africa’s external deficit is to leave interest rates high, or risk an even more serious blowout to the rand exchange rate”.
The report added: “The bottom line is that South Africa is even more stuck. Flat exports, unabated external deficits and an increasingly oppressive gap between high interest costs and nominal growth … there is no way the economy can thrive in this environment. Instead, this is a burgeoning drag, with nothing but further and deeper recession on the horizon.”
It went on to talk about the familiar issues, such as the deficits and the unsustainable debt spiral, saying “there is no easy way out” for the South African economy.
The almost recessionary conditions, the report said, make it “extraordinarily difficult to take serious austerity measures, cut expenditures, reduce subsidies or raise taxes”.
The EAG predicts that the South African economy will struggle to grow in coming years under the fiscal and interest rate policies.
It says “unappealing options” for South Africa include sharp fiscal austerity, slashing interest rates, printing money or doing nothing.
All of these would be disastrous.
“The bottom line, for us, is that the most likely scenarios for South Africa involve either the economy going or the rand going.”
So, that is the note on which we end the decade.
Now could the ideologues in our society please wake up and smell the coffee.
We are staring into the abyss.
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