SA's policy uncertainty index edges further into negative territory as elections loom

JOHANNESBURG - The North West University (NWU) says the policy uncertainty index has edged further into negative territory ahead of the hotly contested general elections.

The index slipped to 65.8% in the first quarter of the year, up from 65.5% in the previous quarter.

Doubt and worry around the outcomes of the May 29 polls are among the biggest factors weighing on confidence.

NWU’s business school said a combination of five factors linked to the general elections have raised the level of uncertainty.

The first of these – and arguably the most contentious are the opinion-based surveys that have forecast a dip below 50% support for the African National Congress (ANC).

If the polls are anything to go by, then a shift to coalition governance at national and provincial levels is likely to add to more unpredictability and instability.

Economist Raymond Parsons said part of the difficulty is that a reimagined governance framework must take into account a possible shift in the country’s political economy.

The introduction of several new parties onto the scene has also made the political environment more competitive and volatile, adding renewed concerns about instability.

Although the business cycle will continue as usual, Parsons warned that the uncertain political outlook was now also weighing on investors and the markets.