7/28/2019 Overview of South Africa Economy

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Presented By,Ritika Shetty

Purnima AminAnup Jadhav

Sanket DangiRohit Chawda

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Overview of South Africa Economy Major Contributing Sector to GDP

South Africa Trade

GDP Growth Rate CPI

Export Import

Government Spending

Future Outlook

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South Africa’s export-based economy is thelargest and most developed in Africa

The country is rich in natural resources and is

a leading producer of platinum, gold,chromium and iron

From 2002 to 2008, South Africa grew at an

average of 4.5 percent year-on-year, itsfastest expansion since the establishment of democracy in 1994

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However, in recent years, successivegovernments have failed to address structuralproblems such as the widening gap betweenrich and poor, low-skilled labour force, high

unemployment rate, deterioratinginfrastructure, high corruption and crimerates

As a result, since the recession in 2008,South Africa growth has been sluggish andbelow African average.

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Mining is South Africa's most importantbusiness sector.

Other major industry sectors includemanufacturing, oil and gas, chemicals,agriculture and tourism.

The financial services, banking and clothingand textiles sectors have also shown major

growth over the last few years.

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Gross domestic product (GDP) growth hasincreased to 3.1% in 2011, up from 2.9% in 2010.

Growth went down to 2.8% in 2012 mainly because

of domestic structural weaknesses and the fragileglobal economic recovery.

GDP growth is expected to rise to 3.6% in 2013,

subject to global recovery taking place and anorderly resolution of the Eurozone fiscal andfinancial crisis during 2012.

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Consumer Price Index (CPI) in South Africaincreased to 126.70 Index Points in December of 2012 from 126.40 Index Points in November of 2012.

Consumer Price Index (CPI) in South Africa isreported by the Statistics South Africa.

In South Africa, the Consumer Price Index or CPImeasures changes in the prices paid by consumers

for a basket of goods and services.

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The inflation rate in South Africa was recorded at

5.40 percent in January of 2013. In South Africa the most important categories in the

consumer price index are Housing and utilities (22.6percent of total weight), Transport (18.8 percent of 

total weight) and Food (15.7 percent of total weight). Others include: Household contents and services (5.9

percent); Alcoholic beverages and tobacco (5.58percent); Recreation and culture (4.2 percent);Clothing and footwear (4.1percent).

The smallest components are Communication at 3.2percent; Education at 2.2 percent and Health at 1.5percent.

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South Africa’s trade, exports and imports are heavilydependent on the nation’s natural resources and thegovernment’s highly liberal trade incentives.

South Africa recorded a trade surplus of R3.7 billion inDecember 2009, according to the South African RevenueService (SARS).

The surplus resulted from a decrease in imports of 13.73%and a decrease in exports of 1.08%.

In December, exports amounted to R45.36 billion andimports amounted to R41.69 billion resulting in a surplusof R3.67 billion.

The cumulative trade deficit for 2009 was R25.84 billion. Compared to a deficit of R71.63 in 2008, this represents a

decline of R45.79 billion or 64%.

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Government Spending in South Africa increased to423560 ZAR Million in the third quarter of 2012from 415115 ZAR Million in the second quarter of 2012.

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Historically, from 1960 until 2012, SouthAfrica Government Spending averaged194547.39 ZAR Million reaching an all timehigh of 423560 ZAR Million in August of 

2012 and a record low of 44897 ZAR Millionin February of 1960.

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Moody’s Investor Services has downgradedSouth Africa’s government bond rating byone notch to Baa1 from A3

Reasons for downgrading the rating were◦ A decline in the government's institutional strength

amidst increased socio-economic stresses and theresulting diminished capacity to manage the growthand competitiveness risks

◦ Shrinking headroom for counter-cyclical policy

actions, given the deterioration in the government'sdebt metrics since 2008, the uncertain revenueprospects and the already low level of interest rates

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The IMF cut its 2013 forecast for SouthAfrican growth to 3 percent from a Julyprojection of 3.3 percent mainly due to theimpact from the continuing euro zone debt

crisis.

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