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 have revised our forecast for South Africa's 2016 real GDP growth to the downside, from 1% to 0.7%. This would imply a near-halving of real GDP growth from 2015's 1.3%. 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. From an output approach, we see some of the impact of 2015's -8.4% collapse in agricultural production carrying over into 2016, while the resilience of the financial services sector is tested by deteriorating macroeconomic conditions.

  • 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 our forecast for South Africa's 2016 real GDP growth to the downside, from 1% to 0.7%. This would imply a near-halving of real GDP growth from 2015's 1.3%.

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 2014e 2015e 2016f 2017f
National Sources/BMI
Nominal GDP, USDbn 350.0 312.7 266.5 270.9
Real GDP growth, % y-o-y 1.5 1.3 0.7 1.2
Consumer price inflation, % y-o-y, eop 5.3 5.2 6.7 6.0
Exchange rate ZAR/USD, eop 11.55 15.48 16.50 17.50
Budget balance, % of GDP -3.6 -4.1 -3.7 -3.2
Current account balance, % of GDP -5.4 -4.4 -4.0 -4.3
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
No Cure For Structural Ills
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
TABLE: GOVERNMENT CONSUMPTION FORECASTS
9
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Monetary Policy
10
Tightening The Monetary Screws Of Credibility
10
Monetary Policy Framework
11
Fiscal And Debt Outlook
12
South Africa Is Not Junk
12
TABLE: MEDIUM-TERM BUDGET 2015, % OF GDP
12
Structural Fiscal Position
13
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
14
External Trade & Investment
15
Current Account Still A Problem As Savings Too Low
15
Outlook On External Position
16
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
16
TABLE: TOP 5 GOODS IMPORTS IN 2014
17
TABLE: TOP 5 GOODS EXPORTS IN 2014
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
ANC Rhetoric And The Post-Zuma Era
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
25
Socio-Economic Issues To The Fore Over The Coming Decade
25
TABLE: PRESIDENT ZUMA'S APPROVAL RATINGS PER PROVINCE, %, NOVEMBER 24 2015
25
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
TABLE: OPERATIONAL RISK
30
Trade Procedures And Governance
31
TABLE: IMPORT AND EXPORT DOCUMENTS
31
TABLE: TRADE PROCEDURES BREAKDOWN
31
TABLE: SSA TRADE PROCEDURES AND GOVERNANCE RISKS
32
Vulnerability To Crime
33
Chapter 5: BMI Global Macro Outlook
37
Global Macro Outlook
37
Unfinished Business In 2016
37
TABLE: GLOBAL ASSUMPTIONS
37
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
38
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
38
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
39
TABLE: SOUTH AFRICA - MACROECONOMIC DATA & FORECASTS
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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