In the early 2000s, South Africa rode the wave of the global commodity super-cycle. High Chinese demand and soaring metals prices brought in foreign capital, bolstered tax revenue, and gave the illusion of macroeconomic stability. The rand strengthened, albeit temporarily, and many assumed that South Africa had entered a phase of sustainable growth.
But the post-2008 world exposed the underlying vulnerabilities. While quantitative easing in the US flooded emerging markets with liquidity, South Africa’s domestic policy response was one of complacency. Institutional decay, policy uncertainty, and a failure to reform key sectors – particularly energy, transport, and education – meant that the benefits of cheap capital were squandered. The rand, already exposed to external shocks, began to weaken structurally.
By Willem Oberholzer
Full story at IOL
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