Economy shudders under repercussions of cabinet reshuffle

04 May 2017 - 08:12 By The Times Editorial
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As 2000 delegates - including 21 heads of state - gather in Durban for the World Economic Forum Africa to debate inclusive growth on the continent, they will not have to look far for the painful evidence of an economy gone awry.

The last week has seen clear evidence of the rapid impact of South Africa's ratings downgrade following President Jacob Zuma's cabinet reshuffle at the end of March.

The first Absa Purchasing Managers' Index to be published since the reshuffle saw it drop to 44.7 points compared with an average of 51.9 during the first quarter.

The index is proof of the brakes being slammed on business activity.

New vehicle sales in April, in numbers released on Tuesday, tell the same story, plummeting 13.3% in the month compared with the previous year.

These indicators starkly tell the story that is playing out in ordinary households as families examine their budgets and batten the hatches.

But in other households other conversations are happening, too.

Those who are wealthier have other options open to them and are looking to greener pastures.

Immigration experts have described to us a significant spike in South Africans looking to move abroad or to at least secure alternative residence or citizenship in other countries.

One consultant said there had been a 250% increase in inquiries within weeks of the cabinet announcement.

These were generally from individuals with the wealth to buy their way into other countries that offer investment-driven residence or citizenship programmes.

The scale and immediacy of these inquiries underscores the mobility of capital and skills. But they are also a warning of the potentially devastating long-term impact should those with the means to drive future growth go elsewhere.

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