Optimism prevails in South Africa, headcounts to increase
Blame it on World Cup euphoria, but a climate of optimism is prevailing in South Africa and seems to be spreading from football fans to bank Ceos.
A new study by PricewaterhouseCoopers (PwC) shows that 93% of South African chief executives expect the economy to grow this year, well above the global average of 65 per cent.
The outlook for recruitment activity has also improved: while 43% of Ceos said that they had to lay off staff last year, nearly 40% expect to increase headcount in 2010 and to increase their investment in leadership and talent development. According to Suresh Kana, PwC Southern Africa Ceo, the positive outlook is "a reflection of the soundness of the country's financial system, which largely shielded the local economy from the full impact of the financial crisis."
A similar survey by Grant Thornton also shows that 60% of South African companies, compared to only 35% last year, are optimistic about the economy and expect the turnaround to occur much earlier than in most other countries. "Expectations of increased revenues in 2010 surpassed global trends with a 60% optimism balance, compared to the global 40% figure," said Leonard Brehm, national chairman of Grant Thornton SA.
"As the economy emerges from recession we are likely to see many businesses reaping the rewards of recession-induced efficiencies." At least 25% of companies, compared to 20% globally, plan to recruit staff and increase their headcount.
New figures indicate that such optimism may be justified. GDP growth jumped 3.2% in the last three months of last year, well above market forecasts of 2.5% and above the previous quarter's 0.9%, the first exit from recession.
Financial services, the biggest sector in the economy, grew 1.1% in the last quarter of 2009, its first expansion for nearly two years.
"I do not think the optimism is overdone," says Mike Atter, SA country manager for Robert Walters Professional Recruitment Services. "There is a positive feeling about South Africa and in the last couple of months we have had more clients looking for staff than at any time in 2009, so we are definitely optimistic."
Markets and economists reacted positively to the recent budget, much-awaited as it was the first under the presidency of Jacob Zuma. The fiscal deficit was revised down, the GDP forecast was revised up and above all there was no hint of the feared populist measures.
As a cherry on the cake, after decades of fiercely-enforced foreign exchange controls, South African banks will for the first time be allowed to make portfolio investments abroad, equivalent to 25% of their liability base. The move has been interpreted as a sign of confidence that there will be no rush towards the exit, especially as the memory of foreign banks' toxic investments abroad is still fresh in everyone's mind.
