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South Africa: Between the economic crisis and World
Since the release of growth figures in May, it's official: Africa's largest economy has slipped into the worst recession since the age of seventeen. However, multiply the first signs of economic recovery. And the World Cup next year will have a positive impact on the economy of the host country.
The global economic and financial crisis has not done well against South Africa hold. The export-oriented mining and automotive industries also suffered severe slumps, and in view of high debt burden of households and rising unemployment weakens private consumption. Since the release of growth figures in May, it's official: Africa's largest economy has slipped into the worst recession since the age of seventeen. However, this recession is not in its length and depth to be comparable with the recessions of the 80s and 90s. Because it has been caused mainly by external factors, and no domestic socio-political crisis. There is already the first positive signs of economic recovery. The sharp interest rate cuts in recent months by about 4.5% and fiscal stimulus measures will thus contribute to a revival of growth even in the second half. Nevertheless, the South African economy will shrink in real terms this year by around 1.0% before it will grow again next year by around 3%. The return to long-term trend growth of approximately 4% is expected for the year 2011.
President Zuma is facing major challenges
The ANC has once again won a clear election victory in April and missed the two-thirds constitutional majority by a hair. The newly founded party COPE, however, who had split off in October by the ANC, won only 8% of the votes for himself and thus has the political landscape in South Africa, not big changes. Under Jacob Zuma, neither the hopes of a rapid reduction in poverty will be the fears of an extreme shift to the left, which were combined in pre-election and his presidency a reality. The occupation of the chief post of the new National Planning Commission with the highly respected and long-standing finance minister Trevor Manuel speaks for a continuity of past economic policies. However, an unemployment rate of 23.5% carries enormous social dynamite. Recent waves of violent protests in the townships to show how difficult it will be for Jacob Zuma to hold the balance between the fulfillment of campaign promises of stability-oriented economic policies and compliance.
Robust Financial System
Shielded by rigid regulation on foreign currency transactions have mainly South African banks, the global financial crisis relatively unscathed so far. The current poor economic situation is reflected yet reflected in the increasing number of non-performing loans. The "big four", Standard Bank, Absa, FirstRand and Nedbank to dominate with a market share of 84% continue to the South African banking sector. As the most powerful banks in the entire African continent, they are accelerating their expansion plans in Africa and to put their focus on the increasingly powerful trade relations between Africa and Asia. Also, the monetary policy in South Africa has proven itself in the crisis. Due to the flexible exchange rate regime of the boundary has been sent by the financial crisis while on a veritable roller-coaster ride. Since South Africa's households and businesses do not have a large amount of their debts in foreign currency, were the negative consequences of the huge exchange rate fluctuations within limits. As one of the traditionally volatile currencies of emerging markets, the margin is also subject to greater fluctuations in the future. In particular, lower prices for platinum and gold inflows or outflows of portfolio investments would once again lead to a weakening of the rand. The South African stock market, which is among the world's 20 largest and most liquid stock markets, was not from the effects of the global economic crisis spared, but could the losses in recent months, however, make it almost completely well again. Does the new start-up for India and South Africa's leading mobile operators (MTN and Bharti Airtel) to a mega-merger to succeed, it would be with an estimated volume of 16 billion
Euros this year one of the world's largest mergers.
Germany as an important partner
Germany has a trade volume of around 12 billion Euros of South Africa's second biggest trading partner after China. In addition, many of FDI flows from Germany to South Africa's well-diversified economy. The company will focus here is mainly supported by active industrial policy of the automobile industry, chemical industry, mechanical engineering and electrical engineering. Approximately 600 German companies, including nearly all major German companies now have an office in South Africa.
Positive effects of the World Cup
This year's Kricketturnier and the Football Konföderationscup were important dress rehearsal for the World Cup next year. Estimates of short-term growth effect of the World Cup but are only around 0.5% more growth because of tourism due to some displacement effects are not unduly benefit. Investment in transport infrastructure, such as the new rail link between Johannesburg and Pretoria are, however, long-term positive impact on South Africa have potential for growth. Moreover, the hope is to gain a clear image of South Africa, following the example of Germany and the football stories in the summer of 2006
source: capetown-online
written by:
Marion Mühlberger,
Deutsche Bank
Research/Economics
Global Risk Analysis Group/Eastern Europe & Africa
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