POLICY uncertainty in SA was high in the fourth quarter of last year, a newly launched index showed on Monday.
The policy uncertainty index, compiled by the North West University School of Business and Governance, was recorded at 55.4 in the fourth quarter. An increase beyond 50 reflects greater policy uncertainty while a decrease below 50 reflects less policy uncertainty.
High policy uncertainty makes private-sector companies invest less, which compromises economic growth and job creation.
The sacking of Nhlanhla Nene as finance minister in December, an interest-rate hike in November, negative assessments of SA’s economy by rating agencies in December and lacklustre growth in the global economy were among factors that contributed to policy uncertainty.
Both President Jacob Zuma’s state of the nation address and Finance Minister Pravin Gordhan’s budget speech later in February should be dedicated to reducing uncertainty and boosting confidence, said Raymond Parsons, a professor at the graduate school of business.
The index is compiled by tracking developments in three components: expert opinions drawn from leading private-sector economists; responses from a Bureau for Economic Research survey of manufacturers regarding whether the political climate is a constraint to doing business; and the frequency of references to policy-related economic uncertainty in leading local publications.