The North West University (NWU) Business School’s Policy Uncertainty Index (PUI) for the second quarter again declined to 50.3 from 55.2 in the first quarter, bringing it to the brink of being in positive territory.

It was last in positive territory in the first quarter of 2018 at the time of Cyril Ramaphosa's inception as President.

The overall global economic outlook continued to strengthen in the quarter under review, with the United Nations (UN) even revising upward its 2021 global growth forecast from 4.7% to 5.4%.

All credible international forecasts, including those of the UN and the International Monetary Fund, still emphasise that the global economic recovery is unevenly spread over countries.

It is subject to challenges arising from renewed waves of the pandemic in several parts of the world. However, overall global uncertainty is shown to be declining, says the NWU.

In the US, the jury is still out on whether the recent surge in inflation there is transitory, as the US Federal Reserve expects, or will be entrenched.

The Federal Reserve System (FRS) gross domestic product (GDP) growth forecast for this year has been raised to 7%. FRS has indicated that two interest rate increases are likely in 2023 and the chairperson believes the current US inflation “will wane”.

On the positive side, and reinforced by the global commodity cycle, South Africa’s economy is showing a strong rebound from last year’s 7% contraction in GDP growth.

A growth rate of almost 5% in South Africa is now widely expected for this year, despite the return to Level 4 lockdown restrictions at the end of June.

Together with the cyclical economic recovery in South Africa, the major reforms dealing with energy supply, South African Airways and Transnet announced in June may have brought the economy to a positive tipping point in its reform agenda, the NWU believes.

As at mid-2021, a tangible improvement in the economic mood is discernible based on the expectation that a wedge has now been driven into the stalemate associated with the structural reform programme to date.

However, negative factors that still balanced out the positive ones in the second-quarter PUI outcome – and which have just kept the PUI out of positive territory for now – include lack of evidence of a continued vigorous implementation-led recovery which delivers tangible outcomes, which if present could push the PUI into positive territory again.

Additionally, the PUI is influenced by uncertainty around how the land reform process will unfold.

The NWU adds that, overall, a boost in both domestic and foreign fixed investment is needed, if the current economic recovery is to be converted into higher medium-term job-rich growth.