Page 87 - The Corporate Report Pack

Meganomics
60% of GDP. Anything higher, suggests a country not positive – pace at which it will grow over the following only being in a debt trap, but having to issue additional three years.
Policymakers have probably not done enough to check the challenges SOEs pose to the economy.
debt, to service interest payments on existing debt. As political risk rises, the premium added onto the cost of raising capital also rises. Higher costs in servicing debt crowd out other areas where funds could be used more productively, like welfare and dependency grants, the recipients of which number more than 17.5 million South Africans. e connection between these recipients and an unemployment rate of 26.5%, which is globally one of the highest, is an obvious one.
While it may sound like the remix of a familiar tune, the focus shi s quickly to what the major rating agencies make of the Budget, and whether enough has been done to avert a dreaded split credit rating. Policymakers have probably not done enough to check the challenges SOEs pose to the economy. e same can be said of labour legislation. Sometimes the best e orts are simply not good enough. It is not from lack of trying, but because the scal outcomes in the next three years will be dictated by policy shortcomings in other areas of the economy, which need to be recti ed.
Another event to focus on will be the South African Reserve Bank’s monetary policy committee meeting at the end of March, and whether it will prepare the economy for some monetary easing. While it will be keen to preserve its in ation ghting credentials, it will not be insensitive to the mediocre pace at which the economy grew in 2016, or the lethargic – yet
is article was published in the ‘Business Day’ newspaper on 23 February 2017.
Colen Garrow has a BCom (Honours) in
Economics. He started a career in banking
with Barclays Bank in 1983, initially on an
accelerated training programme through
foreign exchange and capital markets. He
then pursued the management of forex,
xed income and derivative portfolios
associated with these markets at FirstCorp
Merchant Bank, later becoming the economist for the South African-based branch of ABN AMRO Bank in 1997.
He joined Brait, a JSE-listed private equity company, shortly after the 9/11 terror attacks on the US in 2001. In the following decade, he analysed macroeconomic trends in a number of important sectors of the South African economy, predominantly in sectors to do with those that had some association with government’s ambitious infrastructural development programme.
Since his exit from Brait, he started Meganomics, a platform being used for his book based on the nancial crisis South Africa nds itself tangled in with the global economy. As an independent economist, he continues to liaise with monetary and scal policymakers, as well as with a wide range of media. He was also the author of the ‘Market Eye’ column for Business Times for a number of years.
Colen is an award-winning economist, voted a number of times by Reuters as amongst the top ve economists in South Africa and ranked second for the South Africa Economist of the Year award in 2016. He has also won awards from Reuters as having most accurately forecast economic growth for 2011 and 2012.
Author
The Corporate Report 3