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- The North-West University Policy Uncertainty Index rose to record levels last year.
- It has eased, but remains in negative territory.
- While the re-election of Cyril Ramaphosa as ANC president was taken as a positive, the resignation of Eskom CEO Andre de Ruyter added to uncertainty.
- For more financial news, go to the News24 Business front page.
SA's policy
uncertainty eased in the fourth quarter of 2022 after rising to record levels,
though it remains in negative territory.
This is according to the North-West University Policy Uncertainty Index (PUI), and comes as some of the negative influences either subsided or were priced in by the market, said report author Professor Raymond Parsons on Monday.
Earlier in 2022, the index rose to record levels not seen since 2016, driven in part by global uncertainties including the Russia-Ukraine war.
In the fourth quarter, however, it fell from those highs, dropping from 59.6 in Q3 2022 to 53.2 in the last quarter of the year.
The baseline for the index is 50, so the reading is still in negative territory. But, the report's authors say that the positive indicators for policy certainty in the last three months outweighed the negatives.
The report notes that high levels of policy uncertainty have been shown, empirically, to deter investment, employment, and output. "Elevated policy uncertainty in many countries contributes to sluggish growth. Economic policy uncertainty then has actual consequences for the economy," write the authors.
The decreased uncertainty level was partly attributed to strength in the domestic economy.
"While SA will not entirely escape unfavourable global developments, positive trends in SA in recent months have included the much-better-than-expected GDP growth figures in 3Q 2022, a slight easing in the rate of inflation, lower fuel prices, improved employment figures, and a well-accepted Medium Term Budget Policy Statement in October," it reads.
"The re-election of President Cyril Ramaphosa as ANC President appears to have had a particularly favourable impact on the 4Q 2022 PUI," the report adds.
READ | Carol Paton | What the new ANC top 7 means for business
According to the report, the market further perceived the new ANC leadership as being "committed to expediting economic reform and implementing pro-growth policies and projects."
The report is produced under the leadership of Parsons, who serves, in addition to his professorship at NWU Business School, as a Special Policy Advisor to Business Unity South Africa.
Despite the overall improvement, a few key developments negatively affected certainty in the period.
The resignation of CEO André de Ruyter from Eskom in December further muddied the waters surrounding the future role and functioning of the power utility, according to the report.
Additionally, weakening household spending power and the rate of fixed capital formation were also flagged as concerns.
