South Africa Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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South Africa Country Risk Report
Product Price
$1,195.00

Core Views:

  • We maintain our 2016 real GDP growth forecast at 1.6%. The absence of load shedding at least until May 2016 justifies a minor increase from 2015's 1.4%, but strikes are likely to pick up in 2016. The deterioration in the business environment at the end of 2015 will extend into 2016, depressing investment growth, while private consumption remains limited by high unemployment and rate hikes.

  • Given that the rand has continued to weaken despite the return of Finance Minister Gordhan and food price pressures show no sign of abating, inflation expectations are at risk of becoming disanchored. To prevent this, the South African Reserve Bank will have to hike rates significantly to maintain its credibility hence we are ramping up our expectations to 75 basis points in hikes this year.

  • South Africa's current account deficit has improved from 5.5% of GDP in Q1-Q314 to 3.9% in Q1-Q315. Recent rand depreciation will boost the current account data from Q415. But for a sustainable improvement in the current account without experiencing a collapse in investment, savings must increase with the support of structural reform, which we do not expect.

  • South Africa's ruling African National Congress party will gradually adopt more populist, leftwing policies over the next four years in an attempt to retain dwindling popular support. Policy proposals will be mainly rhetoric until the 2016 municipal elections, after which point we expect an increasing focus on genuinely distributive policies.

Major Forecast Changes:

  • We have revised our 2015 growth forecast to 1.4% from 1.9%. The revision is driven by Q215's 1.3% y-o-y contraction and a further deterioration in the domestic demand outlook, as the July tax rate hike kicks in. Medium-term growth will be undermined by the lack of structural reforms and a low savings rate.

Key Risks:

  • At present it is unclear how bad the electricity situation will be over the next few years. In a worst case scenario where the domestic grid collapses, we would significantly revise down our growth forecast.

Forecast Table:

Macroeconomic Forecasts (South Africa 2014-2017)
Indicator 2014e 2015e 2016f 2017f
National Sources/BMI
Nominal GDP, USDbn 350.0 319.7 292.1 288.9
Real GDP growth, % y-o-y 1.5 1.4 1.5 2.1
Consumer price inflation, % y-o-y, eop 5.3 5.1 6.5 5.2
Exchange rate ZAR/USD, eop 11.57 14.50 15.59 17.19
Budget balance, % of GDP -3.6 -4.0 -3.2 -3.2
Current account balance, % of GDP -5.4 -3.9 -3.1 -3.1
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
2016 Municipal Elections Preview
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Socio-Economic Issues To The Fore Over The Coming Decade
9
TABLE: 2009, 2014 GENERAL ELECTION VERSUS 2011 LOCAL ELECTION RESULTS
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Structural Woes Exposed By Commodity Decline
14
TABLE: ECONOMIC ACTIVITY
14
Fiscal Policy
15
Fiscal Targets At Risk From Public Sector Wage Hike And Low Growth
15
TABLE: FISCAL POLICY
15
Monetary Policy
17
South African Reserve Bank To Ignore Recession Risk
17
TABLE: MONETARY POLICY
18
Balance Of Payments
19
Current Account Rebalancing To Proceed
19
TABLE: CURRENT ACCOUNT
19
Chapter 3: 10-Year Forecast
23
The South African Economy To 2024
23
Underperformance Among EM Peers Ahead
23
TABLE: LONG-TERM MACROECONOMIC FORECASTS
23
Chapter 4: Operational Risk
27
SWOT Analysis
27
Operational Risk Index
27
Operational Risk
28
TABLE: SOUTH AFRICA - OPERATIONAL RISK
28
Education
29
TABLE: SUB-SAHARAN AFRICA - EDUCATION RISK
30
TABLE: GRADUATES BY SUBJECT
31
Government Intervention
33
TABLE: SUB-SAHARAN AFRICA - GOVERNMENT INTERVENTION RISK
34
Chapter 5: BMI Global Macro Outlook
39
Global Outlook
39
Global Growth Weak As EMs Squeezed
39
TABLE: GLOBAL ASSUMPTIONS
39
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
40
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
40
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
41

Assess your risk exposure in South Africa with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in South Africa with confidence.

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