Crisis? What crisis? South Africa beats against the headwinds
Bad infrastructure, a weak economy and vulnerable financial assets – but bankers in South Africa remain confident.
Infrastructure shortcomings, weak macroeconomic indicators and vulnerable financial assets mean worrying times ahead. Local bankers remain confident, but are they being overly optimistic? Sudip Roy reports from Johannesburg.
THE C WORD is barely mentioned in any of the meetings that Euromoney has in Johannesburg. Yes, the economy and financial markets are heading for tougher times but no, the country is not in crisis.
South Africa is facing power outages, rising inflation, a big current account deficit, a collapsing currency, volatility in its financial markets, high unemployment and political uncertainty, so bankers could be forgiven for fearing the worst. The local financial community, however, is hardy.
Although all agree that the strong economic performance enjoyed for the past four years is well and truly over, few expect South Africa to go into financial meltdown, especially as the economy is expected to continue growing, albeit at a much slower rate.
Tom Boardman is chief executive at Nedbank, one of the country’s four biggest banks. He concedes that sentiment has turned negative over recent months. "Interest rate rises and continued pressure on prices have led to a real slowdown in consumer spending," he says.