News from the Reserve Bank that SA saw another quarter of foreign direct investment inflows is welcome, and even if the numbers were tiny the trend is at least in the right direction.
But SA has a long way to go to get its levels of investment even close to what it needs to lift the economy out of its stagnation of the past decade. SA’s domestic savings rate is still woefully low, and it would need a big jump in foreign inflows to finance the sort of expansion in domestic investment spending it should ideally be sustaining. Those inflows are by no means assured in a world in which interest rates are rising fast in advanced economies, sucking liquidity out of global markets and putting emerging market inflows at risk.
Fortunately as it happens, the quarterly bulletin shows inflows not only of foreign direct investment but also of foreign portfolio investment, into the equity market in particular in the first quarter. In the case of FDI, SA recorded a modest R27bn inflow in the first quarter, mainly as multinationals with existing SA subsidiaries injected fresh equity or loan capital. But that followed a robust R604bn of inflows in 2021.
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Source: BusinessTechSA - 🏆 24. / 61 Read more »