Timing matters a lot in determining political success. Gordon Brown could hardly have become prime minister at a worse time because in the summer of 2007 the UK economy had been growing for 15 years, the financial crisis was just around the corner, and the only way was down.
For Cyril Ramaphosa, by contrast, the only way is up. The new South African president has taken over an economy that should be a regional superpower but has been seriously underperforming in recent years. The growth rate has been on a downward trend since the initial bounce back from the “great recession” and is close to zero. Unemployment is above 25% and the poverty rate is higher than in other large emerging market economies.
Under South Africa’s president Jacob Zuma jobs were created in the public sector to make up for the lack of entrepreneurship in the private sector. Inflation is well above target and corruption has been rife.
Zuma’s resignation on 14 February has meant South African shares having their best day in more than three years. Financial markets think Ramaphosa will be an improvement on his predecessor. That, in all honesty, is not saying much.
The immediate focus for the new president will be an anti-corruption drive designed to inspire investor confidence. But he also needs to find a way of nudging South Africa’s central bank into reducing interest rates, and that will require tough tax and spending decisions.
Finally, a big programme of structural reform is required, including redeploying money spent on public-sector salaries towards higher investment in South Africa’s infrastructure.
None of this is easy and it will be deeply unpopular with those who did well under Zuma. Ramaphosa will be given time to get results, but his honeymoon will not last long.
The prospect of higher American interest rates normally leads to a stronger dollar but the greenback has been getting a real caning on the foreign exchanges. The pound touched $1.41 on Thursday but what’s worrying some is the fall in the dollar against the Japanese yen below a long established trend line. This is the relationship to watch.