Economic trends
South Africa is the economic giant of the African continent, contributing nearly 40% to the total African GDP. In the secondary sector, 75% of the biggest African companies are South African. Rebonding after the severe international economic crisis and enjoying the benefits of the organization of the World Football Cup in 2010, the South-African economy has experienced a slight recovery in 2010 (3% growth)., with an expectation of a speedier growth in 2011. After the economy started slowing down again as an effect of the eurozone crisis (which is the destination of a third of South-African exports), growth reached 3.1% for 2011 and should not exceed 2.3% in 2012.
To boost growth, the government announced in October 2011 a plan to make the industry more competitive and create jobs, providing for higher spending on public investment. The eradication of poverty, the establishment of a system of social security, rural development, education, health and the fight against crime have become priorities. To stimulate industrial policy, legislation authorizing the establishment of a new special economic zone was passed. There is now a debate about a possible nationalization of mines, or of imposing higher taxes on mining companies coupled with a strengthening of the equity capital of blacks in the extractive companies. Accelerating the land reform while not affecting investor sentiment will be a major challenge.
Unemployment affects nearly a third of the country's active population and one in two young people. A five-year plan was announced in December 2011 to tackle the scourge of AIDS (affecting nearly 12% of the population), which represents another obstacle to the overall economic development of the country. Eradicating poverty by 2030 is a government objective, since one third of the population is still living below the poverty line. South Africa is the most unequal country in the world, the black majority being largely left behind. Demonstrations have been taking place in the economic capital Johannesburg demanding a fairer redistribution of wealth.
Main branches of industry
South Africa has a subsoil rich in mineral resources. It is the world's largest producer and exporter of gold and platinum and the 4th largest producer of diamonds. The country produces 70% of the world's platinum and also has 60% of the world's coal reserves.
The country has diverse manufacturing industries and is a world leader in several specialized sectors, including railway rolling stock, synthetic fuels, mining equipment and machinery. The services sector is flourishing (almost two thirds of the GNP) and tourism should continue to grow after the stimulus it has received from the World Football Cup. Agriculture only represents a small part of the GNP but employs 30% of the country's active population. South Africa is the 6th largest producer of wine in the world.
South Africa has a sophisticated financial structure with an active stock exchange that ranks among the world's top 20 in terms of market capitalization. Nevertheless, it has to be pointed out that the Rand weakened considerably during the financial crisis. Consequently, the South African government has put in place funds to support companies to guard against a higher depreciation.
International trade
South Africa is very open to international trade. The share of international trade in the country's GNP exceeds 60% (2008-10 average).The three top trade partners of South Africa are: the United States, Japan, and the European Union. The country exports essentially metals and precious minerals and imports machines and equipment, chemical and oil products and food products.
Since the beginning of the world economic crisis, the country's exports remain weak, while import is steadily increasing, leaving the trade balance in growing deficit.
© Export Entreprises SA, all rights reserved.
Last updates: May 2012
