SARB, also known as the South African Reserve Bank, indicated recently that there had been an improvement in economic activities given that the country’s economy had been suffering from the effect of the COVID-19 pandemic and the ensuing consequences of the pandemic restrictions. The main aim of the bank is to ensure stability and sustainable economic growth in the country’s economy. Just like the economies of many countries, the South African economy has suffered adverse effects from the outbreak of the pandemic. However, they have been struggling to recuperate.
The Business Cycle Indicators Show An Improved Economy In South Africa
According to some analysts, the issue that South Africa faces today is the large number of plans that the administration has without the implementation of just one. On September 22, 2020, statistics from the Business Cycle Indicators (BCI) showed an improved economy in South Africa.
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The BCI is a combination of lagging, coincident, and leading records made by the Conference Board to predict how the economy of a country is changing. Statistics from Business Cycle Indicators are published every month. They are used to forecast or confirm the peaks and the pits of a country’s business cycle. BCI publishes for South Africa, Mexico, France, the USA, Germany, Australia, South Korea, Spain, and others.
In an interview with Nompu Siziba, a journalist on iono.fm, data published by SARB from BCI indicated a 2.6% increase in the performance of the South African economy as opposed to the statistics from June, which were worse off. A majority of the elements that were evaluated, indicated a positive correlation. That is, eight out of ten were positive, with only two negative readings being negative. One of the damaging components was the low amount of job announcements that were made. That notwithstanding, the economy is expected to do better in the next six months to 1 year.
Some analysts said that although the economy has seen some improvement, the July data is still about 4.2% down compared to the previous year. However, since May, there has been a lot of progress. Despite this, there is still the major challenge of the economy going back to normal after being hit by the COVID-19 pandemic and the lockdown. He also said that although the mines are not fully operational, there is still an upward shift in economic growth. Thus, there is still a silver lining in the dark clouds. This plunge in economic activities has greatly affected the South African rand (local currency), adversely.
Forex broker data confirmed this and also indicated that there has been a decrease in the value of the local currency compared to last year. Although there were many new traders joining the business during the lockdown as they were trying to find out ways to make passive income, the financial market was still experiencing currency devaluation and high rates of inflation, due to the fall in the economic activities as the coronavirus restrictions heightened. Many traders and brokers and in the South African foreign exchange sector expect a turn of events as the economy is slowly beginning to pick up. And consequently, the markets could go back to normal.
Studying The Trends
He also suggests that it is essential to study the trends closely for the next 6 to 12 months to see if there is still growth, irrespective of the current growth because if during this time frame there is no growth, then it will be difficult for the economy to quickly recover from the effects of the pandemic, consequently making it difficult for the economy to go back to normal. And by July next year, the economy would be fully stable or even back to normal.
Some advise that the government should encourage the growth of the private sector, which contributed about 25% of the economy, which was more than what the state economy contributed the same year.
Business cycle indicators:Conclusion
There should be less interference from the government to encourage development in the private sector, which eventually leads to the growth of the economy, since the private sector constitutes a significant portion of the job market and the economy as a whole. And that the administration should formulate a plan to effectively execute this. Since a majority of the local government in countries like South Africa hardly effectively execute proposed plans, The state should put these proposed plans to work, not just in theory.
Just like many other African countries, the main problem hindering South Africa’s growth is lack of implementation. Several state issues stay for years and years without a solution because the local governments draft up policies that are never implemented, and the country continues to suffer the same problems for decades. Thus the only way that the country can effectively come out of this pandemic situation and go back to normal is by executing the plans that have been implemented, which will go a long way in developing the country’s economic situation.
Plans should also be implemented and executed by the government to solve the low availability of job opportunities because many citizens lost their jobs during the pandemic and are still jobless now, although plans have been implemented by the government to solve the problem. Execution is key in this situation because how on earth is the economy expected to grow when there is a lack of human resources? This problem of plan execution is not only a South African problem but a problem of the whole continent and also other parts of the world.