Foreword from the Project Director
It is becoming increasingly clear that the global political economic structure as the world has got accustomed to over the past few decades seems not only set for fundamental restructuring, but the process has already started. Headlines such Italy struggles with uncertainty, Greek leadership in deadlock, Arab Spring and the developed world's winter of discontent have become commonplace over the past few months. In the past one would have thought that headlines like these simply indicated the usual political power play and jostling for positions. The eurozone economic crisis and the Arab countries' political unrest/regime change have made it clear that the world order is changing very fast. Poor economic leadership in the developed world has not only failed the affected countries' citizens but the rest of world as the consequences are enormous. The failure of the western banking system and the sovereign debt crises that stripped Europe of its remaining pretensions and the US of its triple A rating have shown us a world in which the west is no longer the master of globalization. This happens against the backdrop of a world that is still struggling to recover from the aftermath of the 2008 financial crisis.
Locally it would appear that despite all this concerns there's very little that can be done from an intervention perspective to safeguard us against the contagion effect that would follow. Monetary policy has been used over the past couple of years to try and stimulate growth but it is apparently not working because households are still under a lot of strain. This prevents businesses from producing to full capacity or increasing capacity which means that commercial banks cannot lend. So there is an economic stalemate and there is very little that can be done by government from a policy perspective.
Early this year some economists predicted that South Africa's fortunes would be determined by three major themes, namely Unbalanced Growth, Resurgent Inflation and Job Market Duality (destruction and creation). (Courtesy of Cees Bruggemans, Chief Economist, FNB). As we approach the end of the year their views have been vindicated. While all this is unfolding there is a scramble for Africa as multinational companies and countries are looking for growth opportunities and resources respectively!
The big question remains: As business have we factored all this into our various strategies and are we exploring growth opportunities elsewhere?
Project Director: Members in Business