President Jacob Zuma has prioritized the economy of the country and local government. According to him the economy would take centre stage this term and announced a target of 5% growth by 2019. He has also publicized that local government, the sphere of government closest to citizens, and the “engine of service delivery” would be revitalised and intensely sustained.
While much of the world keeled in the wake of the global financial collapse, South Africa has succeeded to stay on its feet – mainly due to its judicious fiscal and monetary policies.
The country is politically stable under the leadership of President Jacob Zuma and has a well-capitalised banking system, plentiful natural resources, well developed regulatory systems as well as research and development competences, and a well-known manufacturing base.
With a world-class and enlightened legal outline, South African legislation governing commerce, labour and maritime subjects is predominantly robust, and laws on competition policy, copyright, patents, trademarks and quarrels conform to international norms and values. The country’s innovative infrastructure ropes the well-organized distribution of goods throughout the southern African region.
STEPPING UP THE LADDER
South Africa has reached a state where its banking sector has been described as a key part of the new pillar of its economic growth engine mainly due to the growing gross gold and foreign exchange reserves passing from 5,786 up to 49,130 millions USD by September 2014 over the last two decades.
Although a proportion of 80% of the population has at least a bank account, South African authorities argue that despite these positive trends, the current environment in which the monetary policy operates has become increasingly more complex in recent years owing to a mix of both domestic and external factors, which have impacted growth and inflation.
Government’s statistics issued by the South African Reserve Bank (Central Bank) indicate that the country currently faces a mix of subdued economic growth and relatively high inflation with the growth which has climbed to 5.8 per cent in the second quarter of 2014 and this figure is described as the lowest reading since South Africa exited the recession at the end of 2009. Beyond the challenges posed by divergent trends in growth and inflation, the South African Monetary Policy Committee members are also worried that with the demand driven price pressures which remain largely absent, amid slowing final domestic demand growth and moderate expansion in credit to households, the marked and sustained depreciation in the local currency, rand’s exchange rate since early 2011 has clearly contributed to the upward trend in core consumer prices.
PASSING THE ACID TEST
South Africa is a world leader in mining. The nation is eminent for its profusion of mineral resources, describing for a noteworthy percentage of world production and reserves It has forecast that the economy of South Africa will register foremost lift and leap next year if mine workers don’t go on strike. This is the conclusion of a poll conducted by Reuters.
The median forecast from 35 economists recommended that economic growth will pick up to 2.5% in 2015 from an estimated 1.5% this year.
To refurbishment of the gold mining industry, the South African government is directing mining companies to find other uses for disused amenities to upkeep communities and even continue to provide jobs. South Africa’s over-all assets remain some of the world’s most appreciated, with a projected worth of R20.3-trillion ($2.5-trillion). Largely, the country is projected to have the world’s fifth-largest mining sector in terms of GDP value.
It has the world’s largest reserves of manganese and platinum group metals (PGMs), according to the US Geological Survey, and among the largest reserves of gold, diamonds, chromite ore and vanadium.
With South Africa’s economy built on gold and diamond mining, the sector is a significant foreign exchange earner, with gold describing for more than one-third of exports. In 2009, the country’s diamond industry was the fourth unexplored in oil and gas but this is all about to change and very fast. There are recent discoveries and the potential of shale gas points to a flurry of drilling and exploration to come within the next few years, and several factors are driving its emergence as a hub for the wider region. Vast tracts along the South and East Coasts and in the Orange River Basin – a vast and unexplored region adjacent to the Namibian border – have been licensed for exploration by major players including Petro SA, Forest Oil, Tullow Oil, and BHP Billiton.
