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Mon Oct 24 10:49:10 SAST 2016

SONA to be delivered against backdrop of economic underperformance

TMG Digital | 07 February, 2016 13:46
Parliament staff members affiliated to the National Education, Health and Allied WorkersGÇÖ Union (Nehawu) during a protest on November 24, 2015 in Cape Town, South Africa. Parliament resumed business today - but under heavy police guard.
Image by: Gallo Images / Beeld / Lulama Zenzile

This week’s State of the Nation Address (SONA) will be delivered against a backdrop of economic underperformance‚ high unemployment‚ deeply depressed consumer and business confidence and rising government debt levels‚ says Investec economist Kamilla Kaplan.

Based on recent comments from the government and Finance Minister‚ there was great cognisance of the threat of a sovereign rating downgrade to non-investment grade‚ she said.

“Consequently‚ it is expected that State of the Nation Address will deliver a message of fiscal responsibility and provide some indication of a move toward increased government policy certainty‚” she added.

Kaplan noted that the December mining and manufacturing production updates due for release on Wednesday would wrap up the sectors’ releases for both the fourth quarter of 2015 as well as for the last year.

“On a quarterly basis‚ both sectors are at risk of recording a contraction in production‚ suggesting that the sectors will once again detract from GDP. On an annual basis‚ production is expected to have stagnated.

“Beyond the mining and manufacturing industries‚ the weak performance of the remaining sectors of the economy reflects the negative impacts of the drought and the slowdown in consumption and fixed investment expenditure growth. World Bank and IMF growth forecasts of 0.8% and 0.7% respectively reflect little optimism of meaningful improvement in the year ahead‚” Kaplan opined.


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