South Africa Market

South Africa's economy in 2011

South Africa's economic stagnation and 2011 show the coexistence of inflation, external environment, high unemployment and lack of policy coherence is the domestic economy the most important issue in South Africa.

As a small open economy, South Africa, influenced by the world economy. Europe is South Africa's major export market, the current outbreak of the debt crisis in Europe face the challenge of economic development in South Africa. South Africa's National Bureau of Statistics data show that the first three quarters this year, South Africa's economy grew 4.6% qoq, 1.3% and 1.4%; compared to last year, were up 0.6%, down 1. 5% and down 1.7%, slowing economic growth evident. South Africa's central bank in November this year before South Africa's economic growth from 3.2% to 3.0%.

Sectors of the economy, mining and manufacturing output growth fell significantly. Mining is a pillar industry of the South African economy, in the third quarter, mining output decreased by 3.1%, down 6.7%, a decline in the economic sectors in one of the largest industries. GDP growth rate of 13.5% of the manufacturing sector also declined in October, manufacturing output increased by only 1%, lower than economists expected.

Coexist with the economic slowdown is gradually increasing inflationary pressures. From January this year by high food and energy prices driving the South African consumer price index (CPI) rose month by month, the highest value in October, hit 6% this year, South Africa central bank to determine the 3-6 percent inflation range limit .

In addition, the continued depreciation of the South African rand currency also contributed to inflationary pressures. South Africa's central bank statistics, since the beginning of this year, rand against the U.S. dollar has depreciated by about 19%. Central bank governor Gill Marcus said that the depreciation of local currency import prices, thus further pushing up inflation.

South Africa's economic stagnation that monetary policy faces a dilemma, we need to stimulate economic growth, lower interest rates, interest rates will further increase the upward pressure on inflation. In this regard, Marcus made it clear that the current is mainly cost-push inflation, interest rates are not conducive to solving this problem. Therefore, economists widely expected, held in January next year in South Africa central bank meeting on interest rates will continue to maintain a minimum 5.5% interest rate unchanged.

South African Finance Minister Pravin Gordan government announced in mid-October budget report that the South African economy must achieve an average annual growth rate of 7% in order to achieve increased employment, poverty eradication goals. South Africa's official statistics, the unemployment rate for the third quarter, 25% of South Africa, where youth unemployment rate up to 50%, how to deal with high unemployment in South Africa's economic development faces severe challenges.

South Africa's domestic policy uncertainty is another issue to deal with. Some within the ruling Congress Party of South Africa calls for non-mineral and bank nationalization, to support black economic development, which dealt a blow to foreign investors to invest.

In response to these challenges, South African National Planning Commission in November announced the "2030 National Development Plan", in the next two decades to achieve 5.4% average annual economic growth, creating 11 million jobs target. Program is expected that by 2030 the unemployment rate in South Africa from the current 25% to 6%, the Gini coefficient from the present 0.7 to 0.6, the complete elimination of poverty.

In addition, in order to reduce dependence on external economies, South Africa plans to diversify the export destinations, expanding emerging economies, especially with the "BRIC" in trade, in order to avoid external market turbulence to directly affect the South African economy.