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Structural reform happens slowly but steadily

Screen Shot 2021-05-03 at 11.40.07 AM

Source: JP Landman/Agbiz e-newsletter, 30 April 2021, photo credit: esid

South Africa has now been in a ‘demographic recession’ for six years because the population grew faster than the economy. Our population growth is 1,6% pa (allowing for one immigrant every 2,5 minutes). Since 2015, economic growth has not kept pace with that number.

The latest figures from the South African Reserve Bank show that by the end of 2020, per capita incomes were 11% lower in constant terms than at the end of 2014 – a six-year lag. At this stage economists expect growth of around 3,5% for 2021, more than double population growth of 1,6%. (This is provided there is no Covid-19 or other catastrophic development.)

But, say the sceptics, the growth is merely a bounce back from Covid-19. It will take until deep into the 2020s to get back to where we were. That is, of course, correct. But in life you start where you are, not where you wish you were.

To say that the bounce back does not matter is a bit like saying after a six-year drought that the rain does not matter – it will only matter once all the rain that did not fall in six years has first fallen! Where the sceptics are right is what will happen after 2021.
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