The NWU Business School’s Q4 2019 Policy Uncertainty Index (PUI) increased to 53.6 from 53.1 in 3Q 2019 (baseline 50), Professor Raymond Parsons said today.
“Negative factors outweighed positive ones in the fourth quarter of 2019. Policy uncertainty therefore remained strongly elevated and stayed well in negative territory during this period.”
He explained that global financial markets finished the year on a high note as the immediate risks of a US-China trade conflict and uncertainties around Brexit receded. Although the world economy continued to show positive growth, the geo-political environment in some areas has become increasingly risky and uncertain, especially for business investment
Domestically, inflation declined to well within the target range of 3%-6% and the rand strengthened considerably towards the end of 2019, with the prospect of lower petrol prices. And retail sales appear to have been buoyant in November/December 2019
However, Professor Parsons said that adverse factors in SA which kept policy uncertainty in negative territory during 4Q 2019 included in particular weak mining and manufacturing data, the Eskom blackouts, vulnerable public finances, crime and violence, political factionalism, the Moody’s likely downgrade of SA’s investment rating in 2020, and the perception that the National Treasury’s growth plan may not be successfully implemented. Business and consumer confidence remained at low levels.
“High levels of policy uncertainty are reversible,” Professor Parsons stated.
“The latest PUI again confirms that the most important contribution government can make now remains to minimize the uncertainty created by its policies and actions. If policy uncertainty is to be lessened concrete signals about SA’s future economic direction need to emerge from both the State-of-the-Nation Address (SONA) and the Budget next month. There needs to be urgency and resolve in stabilizing the policy outlook.”
The NWU Business School PUI is now in its fifth year.
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