15 April 2019

South Africa: A Good Cop-Bad Cop Approach to the World's, and South Africa's, Economic Growth


The world economy is at a crossroads, with the IMF warning of a synchronised downturn this year but pointing to a 2020 turnaround if policymakers get it right. However, it will take more than playing the good cop to get there, for South Africa in particular. Policymakers will also need to play the bad cop if they want to gear countries for the deeper structural changes underway and too important to be ignored.

A diverse confluence of events last week could not have made it more apparent how much the global and South African economic outlooks are ultimately dependent on policymakers getting the good cop-bad cop mix right.

On the growth front, the IMF released growth forecasts that showed the full extent and ramifications of a synchronised slowdown across the globe and, at home, SA manufacturing and mining statistics confirmed the economy's depressed state.

Central bankers showed they are essentially muddling through, with the US Fed meeting minutes showing the Fed is reserving the right to raise or lower interest rates as it sees fit and the European Central Bank was forced to backtrack on its plans to tighten monetary policy and hold steady instead.

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