Home Issues May 2011

May 2011

The Economy

Over the past few months, all across the world, we’ve seen the beginning of instability in almost every aspect of our political, social and economic life. Students in Yemen engaged in anti-government protests (read our special interest article on page 12), the tragic earthquake crisis in Japan, and North Africa embroiled in civil uprisings; surely all of this will have a knock-on effect for the global economy. And the economists agree that this instability, together with an oil price increase, could very well seriously derail global economic recovery.

Should we be in a panic? Is this yet another start to more doom and gloom economics? Should we worry about a somewhat weakened rand and the subsequent food price inflation (read our article on page 22)? Should we worry about possible instability on the continent making investment in Africa less attractive (read our article on page 11)? As we enter another local government election and strange talk about ousting President Zuma resurface, should we worry about our own political instability and the effect that would have on our global image, association with the BRIC group of countries (read our article on page 16) and our leadership on the continent? Should we worry about the new pressures placed on banks now to contend with Finance Minister Pravin Gordhan’s new regulatory framework? Should we worry about our R1,19 trillion consumer debt (read our article on page 26) and its impact on the real economy?

If anything, we certainly should not, NOT worry. If the recent global economic crisis has taught us anything, it is that, once we become complacent and don’t reduce uncertainty, and don’t promote transparency and disclosure; trouble will quickly seep in. As Minister of Trade and Industry, Rob Davies, recently  shared with us at a private meeting, if government doesn’t begin to confront social issues and engage with social partners in an effort to ensure that our economy’s new growth path actually works, very little change will occur to our domestic economy and global interaction through our association with the other emerging BRIC economies. Issues around the real economy, labour, job creation and talent management, the droughts in China and flooding in Australia, the impact of government protests in Africa and the Middle East must surely begin to inform how we do business, both from a domestic and a global perspective.

We may still be in the throes of Japan’s recent tragic earthquake crisis, and the plethora of other global instabilities, and economists may not know the extent of the impact that these crises will have on the global economy, but hopefully, someone, somewhere has already begun to steer the car differently and persuasively.