There are a number of factors dictating the economic climate of the country and impacting on Citigroup’s forecast of future economic growth.

This was a theme during a recent briefing held by Citi in Johannesburg. The roundtable was presented by Citi chief economist for South Africa Gina Schoeman and Citi leading emerging markets economist David Lubin.

Citi started the year with an economic growth forecast for South Africa of just 1.1%, and has now downgraded this to 0.9%. Schoeman indicated that this relatively small downgrade was attributable to the fact that the company had already accounted for load-shedding in its initial rating, as its likelihood had been announced in December.

Schoeman added that one of the biggest concerns posed by load-shedding was the effect on investor and consumer confidence. Further, she highlighted that this could lead to unprecedented political consequences by potentially changing the way people voted, especially if load-shedding occurred again before and leading into the elections.

She described this year’s elections as a “watershed moment”.

Therefore, she said, the second half of the year would be a period of much risk, as it would be characterised by much expectation as to what would be delivered by government, and how much of this would be delivered.

This came with a caveat of a forecast risk, because the political outcomes and decisions were not defined.

Further, there was the risk posed by Eskom, which had always been a background factor, but sometimes came to the fore with greater-than-expected impacts, she said.

The African National Congress (ANC) was expected to retain power, with the markets predicting it would garner a high 60% of the votes. Issues that could affect the country were strategic votes, with the ANC more split that ever before and confidence lower than ever before.

Schoeman further emphasised that corporate profitability was key to unlocking growth in the country and providing more jobs.

Schoeman commended President Cyril Ramaphosa for linking job creation to specific economic policies.

She highlighted that he had provided measurable accountability for his Presidency, such as yearly investment conferences where investments could be tallied and compared against targets.

She also noted the importance of ease of doing business. Although the country’s ease of doing business had declined over the past decade, it had set an achievable target of being in the top 50 over the next two years.

This was a measurable target, with the country’s progress or lack thereof able to be noted when the next Ease of Doing Business Index was published next year. She highlighted the importance of establishing a capable State before pursuing bigger reforms.

She also touched on the current size of Cabinet and the Ministries, which government had acknowledged needed to be reduced. While this was important, as a reduced Cabinet would engender better coordination, it posed the challenge concerning how the political incumbents, to be affected by the downsizing would be dealt with.

In terms of external factors affecting the country, Lubin indicated that, currently, the external environment for South Africa is one “where China is once again in stimulus mode”.

However, while he noted that the reintroduction of a stimulus was a positive external factor for the country, it would not be “game changing”, and it was unlikely to bail the country out of its current economic state, owing to a number of factors.

Therefore, while the external environment was currently better for the country than in 2018, it was not as supportive as government or its citizens would like it to be.

There were also other factors, such as the China-US trade war, uncertainties around US President Donald Trump’s automotive policies, and uncertainty in the Eurozone.