Why the last 7 years have felt rough

We’ve been in and out of recession. We’ve had more political drama than I’d like for a lifetime. We’ve had several lifetimes of obvious, unresolved corruption and fraud. We’ve had a volatile and depreciating currency by and large.

This graph brought it home a little to me:

You can see the sharp decline in South Africa’s GDP measured in USD terms over the period.

Egypt, despite an Arab Spring has not experienced the same precipitous decline. Nigeria’s recent troubles are now also clear.

Our USD GDP is below the point it was in 2010, offsetting a brief period after 2010 when it was still increasing. So maybe it’s more about the last 5 years than the last 7.

Of course, that is the wrong chart. GDP is affected by population growth and what we experience as individual citizens within a country is closer to GDP per capita.

GDP per capita is down even more sharply

For that, we need to go back to 2004/2005 for the last time our USD GDP per capita was as low as this. What makes it feel so much worse is that our USD GDP per capita more than doubled from 2002 to 2007. So many of us became familiar with the feeling of growing wealth, of good times and progress.

I know that that period of growth still left many in South Africa behind. While significant gains were made in service delivery and social grants and most of the population probably did feel better off, the gains were not as deep as they needed to be.  I suspect this was a mixture of policy and the beginnings of fraud and corruption on the scale we see today.

What will turn this around? Gold is no longer a major earner, coal is becoming persona non grata, uranium is looking its appeal as solar, wind and other renewables come to the fore. Climate change is likely to hit our dry country worse than some other areas and thefore dent agricultural production.

I’m not convinced we have 7 years of Feast ahead of us.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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