Economy
From The Report: South Africa 2013
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With a gross GDP of approximately R3.2trn ($390bn) as of year-end 2012, South Africa has the largest economy in Africa and the 28th largest globally. Industrial strife and policy uncertainty, however, have become key sources of investor concern of late. Recent years of slowing growth have failed to make much of a dent in structurally high unemployment and inequality, although a new government-endorsed development plan seeks to broaden inclusion and establish the foundations for higher-value-added growth. Despite significant downside risks, the development agenda laid out in the 2013 budget and other government policies are designed to steer both its economic planning and private sector investment for the next two decades.
This chapter contains interviews with Pravin Gordhan, Minister of Finance; and Rob Davies, Minister of Trade and Industry.

Articles from this Chapter

Overview

Broad-based development: Despite a challenging environment, the foundations are in place to resume a growth trajectory
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With a long-established track record as the continent’s largest financial platform and one of the world’s biggest mining producers, South Africa has significant economic clout in the region. However, industrial strife and policy uncertainty have become key sources of investor concern of late. Recent years of slowing growth have failed to make much of a dent in structurally high unemployment and inequality, although a new government-endorsed development plan seeks to broaden inclusion and establish…

Analysis

Taxes and spending: Efforts are being made to balance the budget via long-term development plans
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The endorsement of the National Development Plan (NDP) by the ruling African National Congress’s (ANC) Mangaung policy conference in December 2012 was an encouraging sign for South Africa’s private sector. Further, the election of one of the NDP’s chief architects, billionaire businessman Cyril Ramaphosa, as deputy president of the ANC reflected a clear desire to expedite the plan’s implementation. Faced with a constrained fiscal space, the administration is seeking to rein in growth in recurrent…

Interview

Looking ahead: OBG talks to Pravin Gordhan, Minister of Finance
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Interview:Pravin Gordhan What impact do you think the rollout of social security reform will have on fiscal policy? PRAVIN GORDHAN: The government has a very clear fiscal policy framework which is based on counter-cyclicality, debt sustainability and intergenerational equity. Over the past 19 years, the government has demonstrated a firm commitment to sound fiscal policy and will continue to do so. That is why the National Treasury has prepared a long-term fiscal report, which projects expenditure…

Analysis

Rebalancing act: As demand from traditional trading partners drops, efforts increase to boost trade with new regions
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A widening trade imbalance caused South Africa’s current account deficit to broaden to 6.4% of GDP in 2012, up from 4.2% in 2011 and 2.8% in 2010, and the widest since the start of the global financial crisis in 2008, when it reached 7.3%. With the services balance traditionally in deficit, deepening trade imbalances have driven the current account deficit. “While the services account has registered a structural deficit of roughly 4% in recent years, the widening trade imbalance has driven the…

Analysis

Working together: On the heels of major strikes, reforms are being made
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The second half of 2012 witnessed some of the most damaging tensions between organised labour, employers and government in over a decade. With political overtones and tragic loss of life, the success of wildcat (unauthorised) strikes at key mines in 2012 secured well-above-inflation wage increases, spurring protests in other sectors such as agriculture. This has led to what many employers and the largest trade union federations have seen as a breakdown in South Africa’s social contract, with the…

Analysis

Global performers: Foreign direct investment plays a key role in development
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Just as significant as its role as a gateway to Africa for foreign investors, South Africa is also the source of outward foreign direct investment (FDI) flows on the continent, as well as further afield in emerging markets globally and increasingly in developed markets. “In recent years foreign investment by South African corporations has been higher than FDI inflows,” Konrad Reuss, managing director for South Africa and sub-Saharan Africa at Standard & Poor’s (S&P), told OBG. While…