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Business and the economy are ending the year in surprisingly good shape, given the rough ride global markets have had in recent months.

The stock exchange is ending the year roughly 20% higher than it was in January 2007, despite warnings at the time that growth could be subdued after stellar performances in previous years.

The rand, the barometer of investor confidence in the country, also looks stronger than expected, in part because of a weak dollar, but also because South Africa remains an attractive emerging market with a good new-business story. The surprising strength of the country’s consumer boom and the hundreds of billions of rands the government is investing in infrastructure is building local confidence and luring foreign investors.

This is despite government failing to put in place — or get to work effectively — policies needed for economic growth and job creation. Bringing down the cost of telecommunications and strengthening education and skills development are key among these. Black economic empowerment must also begin to move from racial head-counting to broadening the base of those invested in the economy and who have the skills to take advantage of the economic opportunities being created.

But, for now, inflation and interest rate hikes are top of mind, and the outlook for the first part of next year at least does not look good. Internationally, demand for oil and food is driving up prices.

In the rest of the world, central banks try to nurture growth by cutting interest rates. In SA, Reserve Bank Governor Tito Mboweni aims to stamp out inflation by raising them, dampening growth and job creation. He is wrong.

South Africans cannot stop driving or eating, even if those who can afford to are spending on luxury goods. Reducing our ability to buy and sell and start businesses will not stop the country using imported goods. One of the main causes of the country’s trade deficit — a concern of the governor — is the importing of goods for the government’s infrastructure development programme.

Global economic growth is in danger of slowing because of the sub-prime crises. Through complicated financial instruments, investors across the world have been lending to homeowners in the US who now cannot afford to pay their bonds. These bad debts threaten banks and other key institutions in the world financial system.

SA and most other emerging economies look set to escape the worst of the fall-out. Our banks are not heavily exposed to these dicey investments and, increasingly, our key business partners are other emerging economies like China, India, Brazil and other African countries. This ability of emerging economies to ride out crises in the financial systems of Europe and the US is an indication that a new international economic order is developing.

Commodities demand from China and India underpins much of our growth. This is a good thing.

This economy has proved itself resilient and with the 2010 World Cup, among other projects, driving growth, the year ahead looks promising. The biggest threat to our prosperity is not the political risk of a Jacob Zuma presidency — for now it is Eskom, which is unable to keep the lights on.

We wish you a merry Christmas and a happy and prosperous new year.