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:

  • Growth will slow sharply in 2016, rebounding only slightly in 2017. We expect household expenditure growth to collapse, while government expenditure growth decelerates on the back of fiscal consolidation and gross fixed capital formation growth also slows given continued policy uncertainties.

  • We believe that the South African Reserve Bank (SARB) will tighten rates by another 50 basis points (bp) to 7.5% in Q3, given three sources of upside pressures on inflation: 1) the second-round effects of food price inflation, 2) exchange rate depreciation and an increased pass-through from the exchange rate to inflation and 3) a recovery in oil prices.

  • We expect South Africa's current account deficit to narrow marginally to 4.0% of GDP in 2016 from 2015's 4.4% as the trade deficit continues to narrow following the Q1 bottom in commodity prices. Given lower current account deficit financing needs and continued policy instability, we expect limited inflows of portfolio and foreign direct investment in 2016 after Q415 saw posted outflows.

  • The ANC will ramp up its populist rhetoric in the run-up to the 2016 municipal elections. Land reform in particular will resonate with the voters which the ANC is losing to the Economic Freedom Fighters. Yet the ANC is likely more preoccupied with Zuma's succession, as Nkosazana Dlamini-Zuma is displacing Cyril Ramaphosa as the strongest contender for the ANC leadership.

Major Forecast Changes:

  • We have revised down our forecast for South Africa's 2016 real GDP growth, from 0.7% to 0.5%. This would imply a more-than-halving of real GDP growth from 2015's 1.3%. Growth in Q116 was slower than we had anticipated. Meanwhile, slower growth in Europe due to the Brexit will also pose headwinds to the South African economy, weighing on financial market stability, and further tempering investment and trade.

Key Risks:

  • While the electricity situation has stabilised in the short term, in line with reduced demand driven by the economic slowdown, it is unclear how bad the electricity situation will be over the next few years as the current operational stability masks unresolved structural failures. 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 2014 2015 2016f 2017f
National Sources/BMI
Nominal GDP, USDbn 350.0 312.7 272.8 295.8
Real GDP growth, % y-o-y 1.6 1.3 0.5 1.2
Consumer price inflation, % y-o-y, eop 5.3 5.2 6.9 6.0
Exchange rate ZAR/USD, eop 11.55 15.48 15.90 15.85
Budget balance, % of GDP -3.6 -4.0 -3.5 -2.4
Current account balance, % of GDP -5.4 -4.4 -4.0 -4.4
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Real GDP Growth To Halve In 2016
8
TABLE: REAL GDP GROWTH, % CHG Q-O-Q, SAAR
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
11
Fiscal Policy And Public Debt Outlook
11
Fiscal Outlook Clouded By Low Growth And Food Price Inflation
11
Structural Fiscal Position
12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
12
External Trade And Investment Outlook
13
Current Account Improvement As Commodity Prices Bottom Out
13
Outlook On External Position
15
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
15
TABLE: TOP FIVE IMPORT SOURCES AND GOODS IN 2014
16
TABLE: TOP FIVE EXPORT DESTINATIONS AND GOODS IN 2014
16
Monetary Policy
16
SARB To Tighten Rates
16
Monetary Policy Framework
17
Chapter 2: 10-Year Forecast
19
The South African Economy To 2025
19
Underperformance Among EM Peers Ahead
19
TABLE: LONG-TERM MACROECONOMIC FORECASTS
19
Chapter 3: Political Outlook
23
SWOT Analysis
23
BMI Political Risk Index
23
Domestic Politics
24
Weak ANC Election Results Would Expedite Zuma Ouster
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
25
Inequalities Threaten Political Outlook
25
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
TABLE: OPERATIONAL RISK
30
Economic Openness
31
TABLE: TOP FIVE IMPORT PARTNERS AND PRODUCTS, 2010-2014, USDMN
31
TABLE: FREE TRADE AGREEMENTS
32
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
34
Availability Of Labour
35
TABLE: TOP 10 SOURCE COUNTRIES FOR MIGRANT WORKERS, '000
36
TABLE: SUB-SAHARAN AFRICA - AVAILABILITY OF LABOUR RISK
37
TABLE: LABOUR FORCE BY INDUSTRY, '000
38
Chapter 5: BMI Global Macro Outlook
41
Global Macro Outlook
41
Emerging Markets Nearing Inflexion Point
41
TABLE: GLOBAL ASSUMPTIONS
41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
42
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
42
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
43
TABLE: MACROECONOMIC DATA & FORECASTS
45

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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