South Africa has long teetered on the edges of the 1st and 3rd worlds.
Indeed the globe for the past two decades has watched the largest economy in Africa with a mixture of hope and (as one says) trepidation. The hope has been that South Africa, rich and with favorable geographic factors going for it, could survive and even thrive in the post apartheid era. The hope was that it could overcome the fate Zimbabwe, neighbor to the north (also once relatively rich) has found. Right now however, with property rights very much in doubt (such rights form the foundation of a civil society) given the recent land seizures by the government, with Cape Town, one of the world’s great metropolises literally running out of water, with crime rampant, and what appears to be an (even more) ascendant crony class, things don’t look good for the country.
If the rule of law continues to erode in the country so too will the economy. Ask yourself if you would keep your business or home in a country that now condones (and we fully acknowledge South Africa’s racist history of course) the wholesale appropriation (without compensation) of people’s land? How can a society function over the medium to long term if one’s property can just be taken for political reasons? How can a society function and create wealth if contracts are just ripped up? Historic injustices aside (and they are significant) if property rights go out the window in South Africa things will not go well. That is almost guaranteed.
With South Africa reeling amid concerns of land expropriation, the rand tumbling amid broad emerging market fears and the local economy pressured by collapsing consumer spending, moments ago the Pretoria-based Statistics South Africa announced that Q2 GDP contracted at a 0.7% annualized rate, missing expectations of a 0.6% increase, and together with the sharp drop in Q1 GDP, South Africa has now officially entered its first recession since 2009.