South Africa's economy has begun to benefit from improvements in power distribution and efficiency at the country's ports and railways.
Vlad Antonov/Getty Images
South Africa's economic growth is accelerating as the country overcomes barriers that have held it back for years, Standard Bank Group said.
Chief economist Ghulam Ballim said efforts to reform governance and the performance of critical infrastructure bottlenecks have finally woken up Africa's largest economy, which has grown less than 1% on average over the past decade due to mismanagement and corruption.
He sees growth of 1.7% in 2027 – more upbeat than the International Monetary Fund, which this week maintained its 2027 forecast at 1.3% – rising to 2% in 2028.
“We will continue to build incrementally towards migration velocity,” Balim told Bloomberg in an interview from Cape Town. “The most important component in this more than 2% growth path relates to institutional capacity.”
President Cyril Ramaphosa last year established a judicial commission to investigate criminal syndicates that have infiltrated South Africa's justice system, following explosive allegations against the police chief in KwaZulu-Natal province. The allegations reignited concerns that corruption, which flourished during the rule of former President Jacob Zuma, remains a serious problem.
The Madlanga Commission's final report was due in late August, but on Thursday the President extended it to 16 November. This pushes the publication of the potentially politically damaging findings until after the municipal elections on 4 November.
Balliem said, although the investigation has highlighted the seriousness of South Africa's institutional breakdowns, it could be “cathartic” and boost investor confidence.
“Overall governance is improving,” he said. “Capital is going to chase confidence. Confidence will depend on the ability to make the rule of law adequate, predictable and upheld.”
South Africa's economy has begun to benefit from improvements in power distribution and efficiency at the country's ports and railways. He said efforts to strengthen the rule of law are likely to gain momentum.
Nearly 70% of the reforms identified as targets by Ramaphosa in 2020 are either on track or completed.
Balliem said the strong growth would extend beyond South Africa's borders, with GDP in the southern continent increasing by 0.7% for every one percentage point increase in the country's GDP.
“If South Africa does well, the region does well too,” Balliem said. “If there is any region that can really turn the tide, and turn the tide for the rest of sub-Saharan Africa, it is Southern Africa, with South Africa at the centre.”