South Africa’s economic growth forecast is the lowest on record, but this only tells part of the story about the damage President Jacob Zuma has done to the economy and businesses.

In January, the International Monetary Fund cut South Africa’s economic growth outlook for 2016 to 0.7% – the lowest-ever forecast for the country.

While the economic slowdown is partly caused by lower commodity prices, political problems continue to hurt the economy.

Sasfin Securities’ deputy chairman David Shapiro said structural issues hamper growth in the country.

Speaking on Business Day TV, Shapiro said the lack of economic growth means that South Africans are getting poorer.

The graph that shocked David Shapiro

Shapiro said he was shocked when he looked at a graph of the five-year performance of the JSE in US dollars.

Someone who bought into the JSE would have shown a return of around 60% in rand terms. The US’s S&P 500, in comparison, was up by around 55%.

However, when the JSE’s value is converted into US dollars, the JSE’s returns are down 25%. That means there is an 80% gap between the JSE and the S&P 500 when measured in a hard currency.

“This shows how far down the tubes we’ve gone,” said Shapiro, highlighting that the rand vs the USD has declined by 120% over the last five years.

The JSE’s performance in US dollars

The graph below shows that an investor would have made a 28% loss over the last 12 months if they invested $10,000 in the iShares MSCI South Africa ETF.

The ETF, listed on the NYSE, provides investors exposure to large and mid-sized companies in South Africa through targeted access to 85% of the South African stock market.

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