South Africa has taken a ”huge slide” down the rankings of an international assessment of economic freedom, although the figures it contains, released on Thursday, are for 2004.
According to the latest Economic Freedom of the World Annual Report, published by the North American-based Fraser Institute, a public policy organisation, South Africa now ranks 53 of 130 countries measured.
In 2003, it was in 37th position.
The index, which measures the degree to which the policies and institutions of countries are supportive of economic freedom, shows South Africa earned 6,7 out of a possible 10 points in 2004.
The survey measures economic freedom in five areas, including: size of government; legal structure and security of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labour and business.
On Thursday, the Free Market Foundation of Southern Africa, one of the participating institutions in the publication of the report, said South Africa ”will not escape unscathed” from its ranking drop.
”The decline is due to: increased government spending; challenges to the independence of the judiciary and escalating crime; increased general regulation; contradictory policies on foreign trade and foreign investment; increased regulation of credit markets; continued inflexibility of labour regulations in the face of extremely high unemployment; and increased business regulation,” the foundation’s executive director, Leon Louw, said in a statement.
The only ray of light in the 2004 figures was that monetary authorities continued to maintain monetary discipline.
Louw described South Africa’s tumble from 37th to 53rd as ”a huge slide down the rankings”.
”The average rating for the 130 countries rated in the report was 6,5, so South Africa remains two percentage points above the average.”
However, if South Africa’s economy is to move from average to outstanding by comparison with other world economies, policy makers will have to give serious thought to adopting policies that enhance the country’s economic freedom, and did not detract from it.
”Government has critics that want South Africa to move in the other direction, reducing the economic freedom of citizens. Take ten percentage points off our rating, which some proposed policies would do, and we would move down to 95th place in the rankings.
”At that level there would be a substantial loss of freedoms, including political freedoms, which would please very few South Africans,” he warned.
According to the index, Hong Kong retains the highest rating for economic freedom, 8,7 out of 10, closely followed by Singapore at 8,5. New Zealand, Switzerland, and the United States tied for third, with ratings of 8,2.
The rankings of other large economies were: Germany, 17; Japan, 19; France, 24; Italy, 45; Mexico, 60; India, 53; China, 95; Brazil, 88; and Russia, 102. — Sapa