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With the arrival of the 17th year of the third millennium, many welcome the fresh start a new year brings after a tough 2016, writes Aaron Burton, Datta Burton & Associates.
It is also an opportunity to take stock of the previous year, learn from it, and use that knowledge to prepare for the year ahead. This isn’t only applicable on a personal level but also on a business and economic front.
Unfortunately, in terms of the South African economy, it might not be the bright and bountiful year everyone is hoping for. Based on various local and international factors, Datta Burton & Associates predicts the following key trends for 2017.

Trend 1: Uncertainty
We have all seen the rise of populism in politics on the global stage with Trump’s victory, Brexit, and others. This trend has not yet ended. On the local front, the internal politics within the ANC is likely to increase, with Zuma’s position looking more tenuous by the day. Add to this the (likely) ratings downgrade and uncertainty levels increase even further. How each of these will play out in 2017 is largely uncertain, and in an uncertain market, consolidation and risk reduction is what we can expect.
The increase in the US interest rates by the Federal Reserve will further compound the effect of the uncertain outlook, which will probably result in more capital leaving South Africa.

Trend 2: Technological disruption
Technology is the real wild card for 2017. Local disruption is being driven by connectivity, and as more devices and users are connected, we can expect to see an increase in integration and convergence of functionality. This simpler, online world lowers barriers to entry and will increase the number of potential competitors. Watch out for technology in the fintech and miningtech space specifically effecting South Africa.
For players already established in the market, there are two facets to the technological disruption on the horizon. The first is big data. This low hanging fruit is available to many but have not been fully exploited yet. We should see investment in both data gathering and processing systems, which can result in a step change improvement in performance.
The second area is the market’s response to the threats of technology by established players. Acquisitions by large players and splitting-off of new offerings will be the visible protective methods, as well as attempts to create barriers to entry such as regulation.

Trend 3: Limited resurgence of SA’s mining sector
Supply limitations within mining should see improved prices in many commodities. Gold may well benefit from the reduced rand. Don’t expect any sort of boom within the mining sector in South Africa just yet. The policy uncertainty, political infighting within the ANC, and country risk within South Africa, combined with the potential fall-out from Brexit, slow any recovery or potential benefit from a Trump-led infrastructure spend.

Trend 4: Improving conditions and confidence towards the end of the year
The darkness of uncertainty should start to clear towards the end of 2017. Although Trump will likely remain quite unpredictable, expect his impact on the world economy to be limited by the realities of American politics. Additionally, the end of the year should show us the post-Brexit landscape and potentially the post-Zuma ANC. The markets should take the reduction in uncertainty and reduction in political strife as a positive sign. Expect consumer confidence to increase and markets and companies to reacting accordingly. If we don’t see an end to the Zuma-led ANC at its elective conference, then this recovery may well get pushed back.

Trend 5: Aggressive moves from bold players
2016 was a difficult year, not only for South Africa but the entire world. 2017 will unfortunately continue on the same path but this should start to turn around towards the end of the year. Knowing this can help companies to continue weathering the storm by keeping their eyes on the silver lining.
In times like these, there is also a massive opportunity to strike while competitors are weak and assets are cheap. Most companies in strong positions with low debt on their balance sheet have not done this enough in 2016. This is a great time to own your market or your industry. Disruptive technology and/or disruptive business models can be a potential catalyst for this. For these reasons, South African businesses should expect to see some industry shake ups in 2017 driven by aggressive moves by bold players.