The first chapter of the ninth edition of the economic update discusses recent economic development in South Africa. It underlines that economic growth continued to decelerate in 2016, marking the third consecutive year of negative per capita growth. Nonetheless, 2016 may mark the trough of South Africa’s business cycle. A modest recovery is now foreseen for 2017 and 2018, driven modestly by rising commodity prices, easing inflationary pressures and a pickup in credit stimulating household consumption demand. By contrast, the continuation of the needed fiscal consolidation efforts should not offer any significant stimulus to GDP growth. The report argues that private investment will be the determining factor influencing the GDP trajectory. On the one hand, continued weak private investment would further undermine growth prospects, raise again the likelihood of a costly rating downgrade, and perpetuate a vicious circle of low growth–low investment. On the other hand, accelerated investment could benefit from a still weak and more stable rand, improving electricity capacity, and less fractious labor relations, to boost exports and growth and stabilize the capital account. Accelerating investment will require providing a predictable business environment, not least through greater policy certainty. The second chapter discusses the relationship between private investment and jobs creation. It reveals that in recent years, private investment increasingly went to less productive sectors, generating negative total factor productivity growth. It analyses using firm level data the effectiveness and efficiency of investment tax incentives and suggests that, overall, tax incentives generated since 2006 additional private investment exceeding foregone fiscal revenue, and contained the contraction recorded in some sectors, manufacturing in particular. It nonetheless makes the case for re-orienting these incentives towards sectors where their effectiveness can be observed (agriculture, manufacturing, trade, construction, and other services) and away from sectors on which they have no tangible impact (mining, finance, transport, and electricity). Sectors which would benefit from re-oriented incentives are also those enjoying the largest employment multipliers, thus amplifying the impact of incentives on jobs creation. The impact of these incentives would equally be magnified by the emergence of new comparative advantages in manufacturing and trade, resulting from the decline in commodity prices and the protracted depreciation of the Rand since 2012.