SA Policy Uncertainty Index eases for 2nd consecutive time: NWU Business School
The Policy Uncertainty Index reading for the fourth quarter of 2023 came in at 65.5 index points, down by 6.3 index points compared to the third quarter, the first time it has dropped below 70 index points since 2022.
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JOHANNESBURG - North West University’s (NWU) Business School has reported that the country's Policy Uncertainty Index eased for a second consecutive time.
The fourth quarter of 2023 reading came in at 65.5 index points, down from 71.8 in the previous quarter.
Despite it easing, uncertainty over policy decisions is expected to persist as the country prepares for the general elections.
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The Policy Uncertainty Index dropped below 70 index points for the first time since 2022.
Slower inflation, which could drive down interest rates, is among the reasons for the slight improvement in policy uncertainty seen in the fourth quarter.
Successful BRICS (Brazil, Russia, India, China, and South Africa) and African Growth and Opportunity Act (AGOA) summits hosted by South Africa in 2023 also contributed to a better picture on the foreign trade front.
However, anything above the baseline of 50 index points means policy uncertainty remains deeply in negative territory.
Chronic power cuts and bottlenecks in the logistics sector continued to weigh down on the country, impacting economic growth.
An economist at NWU’s Business School, Raymond Parsons, said that uncharted political waters in the build-up to elections could also be factored in among negative trends.
Populist messaging in election campaigns is expected to spook some investors. However, Parsons said that energy and logistics reforms could still be tailwinds for growth.