Apart from the perennial problems of unemployment and crime, 2007 kicked off like a fabulous South African summer day – sunny, bright and with no wind to spoil the fun. Nobody was paying attention to the storm clouds gathering just over the horizon and the good times were expected to just continue.

However, as the months passed, the impact of the political uncertainty caused by the ANC’s leadership battle, the power cuts caused by Eskom running out of generation capacity and massive increases in the interest rates started taking their toll and a far more gloomy picture emerged.

In January, South Africans were looking forward to another good year. The economy had grown 5% a year on average for the past three years and, despite signs that consumer spending was starting to slow, it was felt other sectors such as mining and construction would step in to take up the slack.

After all, commodities were booming on the back of a global economic surge and the government was spending more money on roads, power stations and rail services than at any time since the early 1980s. The private sector too was investing in growing its ability to meet government’s needs and serve a whole new group of consumers.

Confidence was the default setting and, while the signs were always there that the heady growth rates of the past few years would not continue, these were largely ignored except by the more pessimistic economists.

They pointed out the world economy was starting to slow and that South Africa did not produce anywhere near enough skilled people to fill vacancies or man overworked machines. Crime also deters immigration while giving the best and the brightest young people a good reason to ply their trades elsewhere.

There are no quick-fixes to any of these problems and the lack of capacity in local and provincial governments, which mean projects get delayed, has been exacerbated by already stretched senior bureaucrats and politicians spending more time fighting each other than attending to the business of running the country.

But with the question about the ANC’s decision about who will lead the party and, ultimately the country, through the 2010 soccer showcase due to be settled before ‘Auld Lang Syne’ is sung by revelers welcoming in 2008, much of the uncertainty that has been clouding the picture will dissipate and, with it, some of the drag on growth will disappear.

Of course, political certainty will not undo the effects of oil prices uncomfortably close to US$100 a barrel or of the four percentage points increase in interest rates on consumers who have gorged on the abundance of cheap credit and all the things it makes possible.

Nor will it make the masses of South Africa’s unskilled and unemployed workforce suddenly employable, ensure Eskom has enough power to meet the country’s needs or guarantee Transnet’s trains will run on time.

But it will set the stage for policy interventions, started by the government and already underway, to start dealing with the economy’s constraints.

Government economic policy, as spelled out by the Accelerated and Shared Growth Initiative for South Africa (Asgisa) aims to get economic growth up to an average of 6% a year by 2010 and to halve unemployment by 2014.

Spearheaded by deputy president Phumzile Mlambo-Ngcuka, Asgisa is an attempt to achieve an economic miracle through targeted micro reforms. Apart from skills shortages, policy makers identified rand volatility, excessive red tape, weak competition and infrastructure deficiencies as some of the key constraints that could make it difficult for the country to achieve the growth target.

Anything less will not create the number of jobs needed to eradicate mass unemployment. And without this, the political system that created the high growth environment and job creation possibilities in the first place, is unsustainable.

And while the timeframe for Asgisa to meet its targets may seem unrealistic in light of a slowing world economy and falling domestic business and consumer confidence, the fact remains that South Africa is still in the midst of its longest economic upswing since World War II and the rand, while still more volatile than would be considered ideal, is consistently more stable than at any time since the economy was opened to the outside world. Jobs are being created rather than cut and South African firms are aggressively claiming their place in the world economy with more than US$24-billion in cross-border mergers and acquisitions done this year so far.

2007 may not have been the year that was being looked forward to in January but it wasn’t bad by any stretch of the imagination. The signs are all there that 2008 will be another good year, although it is unlikely to shoot the lights out.