South Africa's growth prospects are forecast to improve in the coming year with the expectation of a more business-friendly environment following the election of Cyril Ramaphosa as ANC president.
Global economic conditions are also expected to improve, leading to an upturn for many of the world's leading emerging markets.
While South African growth for 2017 is estimated to be only 0.7%, Russian firm Renaissance Capital predicts that it could improve to 2% next year. This comes as policy paralysis in the US, a weaker dollar, a recovering eurozone, supply-side reforms in China and the search for global yield continue to lure investors towards emerging markets.The prediction is higher than that of the Reserve Bank, which expects growth to come in at 1.2% next year. The IMF sees expansion at only 1.1%.
Charles Robertson, chief economist at Renaissance Capital, said: "We have a positive bias and see potential for reduced political uncertainty post the ANC's conference, combined with the improved trade position given the weak rand, to support an above-consensus economic rebound."
Jason Muscat, senior economic analyst at FNB, said agriculture and mining were expected to provide positive growth in the new year despite the potential for policy uncertainty in both sectors. A weak La Niña weather pattern for 2018, bringing above-average rainfall, would aid agriculture.
"We're not particularly upbeat about the manufacturing sector despite the fact that global growth is picking up," said Muscat."South Africa's manufacturing sector has seldom been able to take advantage of a weaker rand and better global growth because they are less geared to exports than they could be."There are so few manufacturing sectors that are actually geared for export. Some of it will be electrical machinery. Cars is a significant one."
Muscat predicted a positive period for business services despite real estate being relatively subdued.
"Banking and insurance, which are two big industries, are well capitalised and regulated and there are more people entering into the market. Liability growth has grown significantly in terms of deposits."
But unemployment was unlikely to budge. "We need to be concerned about quite aggressive fiscal consolidation if the Treasury and government are to stave off a downgrade. That implies higher taxes in the form of increasing wealth taxes, fiscal creep or bracket creep, and that will offset some of the positives that consumers have been feeling over the past couple of months.""South Africa's manufacturing sector has seldom been able to take advantage of a weaker rand and better global growth because they are less geared to exports than they could be.
"There are so few manufacturing sectors that are actually geared for export. Some of it will be electrical machinery. Cars is a significant one."
Muscat predicted a positive period for business services despite real estate being relatively subdued.
"Banking and insurance, which are two big industries, are well capitalised and regulated and there are more people entering into the market. Liability growth has grown significantly in terms of deposits."
But unemployment was unlikely to budge. "We need to be concerned about quite aggressive fiscal consolidation if the Treasury and government are to stave off a downgrade. That implies higher taxes in the form of increasing wealth taxes, fiscal creep or bracket creep, and that will offset some of the positives that consumers have been feeling over the past couple of months."..