Tough year ahead for SA, says KPMG CEO Trevor Hoole
With economic growth of just 1.5% expected for 2015, it is almost certain that South Africa will only narrowly escape a technical recession, say experts. With a marginal rise in GDP growth (to 1.7%) predicted for 2016, many are concerned about the continued regressive growth in the economy.
According to Trevor Hoole, CEO of KPMG South Africa, 2015 was a tough year; one which saw lower macroeconomic numbers globally but particularly in developing economies. He says this will be the second concurrent year that South Africa has faced rigorous market downgrading and underperformed productivity, skating through on lower-than-expected economic growth.
"Simply put; it's a tough market with more developing countries competing for less available revenue to support their growth. However, South Africa has the added challenge of trying to keep investor confidence. Lower economic growth, coupled with volatility in power supply, labour instability and, the perception of lack of leadership; South African CEOs as well as foreign investors are less optimistic about the prospects of doing business in South Africa - which continues to impede investments into the country. Added to this, the Finance Ministry debacle in December has done little to instill confidence in our country's leadership. Poor financial performance and weak corporate governance at State-owned enterprises also adds fuel to the fire."
Other BRICS countries are also feeling the pinch, with both Brazil and Russia in negative territory and expected to experience below 0% economic growth for both this year and last.