The inclusion of several investor-friendly ministers in South African president Cyril Ramaphosa’s new cabinet has been interpreted as a sign that the government may renew its push for reform. Local financial markets have rallied on the news. But Mr. Ramaphosa’s government faces an uphill task to turn the economy around. Data due early next month are likely to show that GDP contracted by as much as 2% q/q saar in Q1. And while figures available for Q2 have been a bit better, there’s little sign of a strong recovery. More fundamentally, the structural reforms needed to lift South Africa’s potential growth rate will be difficult to push through in the face of opposition, including from within the ANC.
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