SA'S NEW FAIRWEATHER FRIENDS

South Africa's growth estimates hit a new low this week. The IMF cut the country's growth forecast by almost half to less than 1%. The cut is in line with other estimates, all of which synergistically do not bode well for the economy. One can expect South Africa's growth forecasts to be addressed by the finance minister in his budget speech next month. No matter what remedial steps he proposes, the prospect of averting a recession is a pipe dream. This should not be surprising, but consequentially inevitable. Over time the Zuma government has dismantled the pragmatic economic policy framework that was put in place after 1994. In doing so, his government purposely sequestered the country from Western interests, eroded the private sector, and undermined its democratic institutions, notably the judiciary. While it is true that falling metal prices, coupled with a meltdown in exports to China have adversely impacted the country's economy, the ANC government's chronic mismanagement and structural weakness of the economy, far outweighs the impact from outside economic forces. A timely example is the oil price phenomenon: when most countries are enjoying the benefits of a dramatic drop in the price of oil, South Africa derives no benefit. The country's moribund economy, compounded by the collapse of the rand will not result in a drop in the petrol price. With the government desperately seeking revenue enhancements, one should rather expect the finance minister to announce a tax hike in the petrol price in his upcoming budget speech. The Zuma government cannot sustain the country based on a growth forecast of less than 1% without foreign aid. It's new best friends, China and Russia, are wrestling with their economic problems, and will not step up to the plate. Who else? Western interests and the IMF of course. The American colloquialism, eating crow, may have some particular significance in time to come.