How Will Recent South Africa Elections Have an Impact on Its Economy?

children-200066_1280   As a result of last week’s local elections, the reigning ANC party lost some key seats and power in the major cities, and this is likely to affect the economy, but as to how, some experts are not sure:

“Moody’s rates the country’s debt at Baa2 negative, but writes that the shifting political landscape in the nation will likely stimulate pro-growth reforms and greater security over the medium term—which could ultimately be reflected in better credit metrics, although the firm isn’t reviewing its rating at the moment. Yet there’s also the potential for spending pressures to rise in the near term.”

And part of a note from Moody’s:

“The election results reflect the rising influence of opposition on the policy agenda. This is underpinned by the ongoing societal trends and change among voters where the larger segments are from the black middleclass (sic), born-free, and urban, demanding faster socio-economic changes. These long-term trends create opportunity for reviving the ‘Africa rising’ narrative and could help South Africa escape the low growth trap of past several years.

The change in the political power balance infers a shift from redistributive policies towards more growth-oriented economic management and business-friendly reforms that will expand job opportunities, especially for the country’s youth, while improving service delivery.”

Many are cautious, but there is reason for hope and promise.

 

“South Africa Elections Could Bring Reforms, But Also More Spending”: http://blogs.barrons.com/emergingmarketsdaily/2016/08/08/south-africa-elections-could-bring-reforms-but-also-more-spending/

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