JOHANNESBURG, It is going to be a better year for the South African economy in 2017 compared with the past few years, says Johann Els, a senior economist at Old Mutual, one of the biggest investment firms in the country and in Africa.

In a briefing for the media on the economic outlook for 2017 here Wednesday, Els said the world economy was improving and this was impacting positively on the local economy, which was showing signs of a turnaround.

Recent rainfall over large parts of South Africa, which had been in the grip of a drought for two years, will improve the agricultural sector's performance, leading to lower food inflation. The stabilizing Rand and expected lower inflation will likely lead to interest rate cuts later in the year.

However, political and economic policy uncertainty remains the main risk, he added.

"Our biggest risk is uncertainty regarding politics and economic policy because that impacts on confidence levels," Els said.

"Consumers are not confident about the future. Businesses are not very confident. So, if consumers are not happy, a lack of confidence means that we are not spending. Lack of business confidence means that businesses are not investing. And those two issues could have an impact on economic growth. And that's why the upswing in the growth cycle will be fairly muted.

"Yes, growth will be better than last year. But it's still not what we need."


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