Analyst: Hawks & Gordhan conflict damaging SA's economy

The NWU's Prof. Prof Raymond Parsons said in a statement that unless the conflict between the Hawks and Finance Pravin Gordhan is resolved soon, the collateral damage to the economy will be considerable.

"If the delicate situation that has developed between the Minister and the Hawks is not successfully managed from now on, the overall effects could well exceed the economic shock SA experienced when former Finance Minister Nene was replaced in December 2016," Parsons said.

He added that the confidence factor is paramount and it comes at a time when the SA economy is particularly vulnerable, yet with new opportunities emerging.

Parsons is also concerned about the credit rating agencies that will return to SA in November to revise the country's rating.

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"The drastic fall in the Rand now is an early warning signal of negative consequences that can follow. The political and policy uncertainty generated by the Hawks interaction with Finance Minister Gordhan has now enjoyed widespread global attention.," he said.

Speaking about investor confidence, Parsons said that the uncertainty undermines coherence and consistency in policy adding that if a low rand persists, the subsequent rise in inflation will hit the poor particularly when they are already suffering the burden of high inflation.

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With a close to zero growth rate expected this year and unemployment rising, Parsons warned against further weakening of investor confidence in present circumstances would keep SA in a low growth trap. 

"The focus must remain on what SA now needs to do to avoid an investment downgrade and to acquire the means to instead continue to strive for a bigger, stronger and better economy", Parsons said.