Gross domestic product
South Africa’s real gross domestic product (GDP) at market prices on a quarter-on-quarter seasonally adjusted annualised basis lifted 3.2% in the fourth quarter of 2009 from 0.9% in the third quarter. These positive figures snapped the first instance of three consecutive quarters of negative growth since the fourth quarter of 1992. The fourth quarter of 2008 had registered -0.7%, first quarter 2009 was -7.4% and the second quarter struck -2.8%.
The result in the second quarter had ushered in the first recession in 17 years. It was also the worst figure since the third quarter of 1984, when GDP was at -6.5%. Non-seasonally adjusted year-on-year (y/y) GDP in the fourth quarter was placed at -1.4%, from -2.2% in the third quarter. GDP growth has ranged widely for the period 2003 to 2009 Q4, with the highest growth coming in the second quarter of 2005 (Table 1). Total GDP and GDP per capita have virtually doubled since the turn of the century (Table 2). For 2009, real annual GDP decreased 1.8% from an increase of 3.7% in 2008 and from over 5% growth in 2007.
Manufacturing registered the largest decline at -10.7% and mining and quarrying dropped 7.2%. Prior to the recession, South Africa had recorded 40 consecutive quarters of positive growth – the best performance since World War Two. The fourth-quarter 2008 decline was thus the first decline in a decade.
The largest sectors of the South African economy, based on GDP figures for the fourth quarter of 2009, are shown in Table 3. The sectors showing the largest year-on-year growth in the fourth quarter were construction, general government services and electricity and water, but the biggest economic sector is tertiary at
around 60%.
The International Monetary Fund (IMF) reported in January 2010 there is good news ahead: signs of recovery in GDP are already appearing. ‘Industrial production began to pick up in South Africa in the third quarter of 2009,’ the IMF reports.
Trade: imports and exports
South Africa’s international trade has risen sharply over the past 10 years (Table 4). In 2004, the value of imports rose above that of exports. Tables 5 and 6 show the largest import and export sectors, respectively, for 2009.
While 2009 saw declines across the board in the level of trade, mineral fuels and oils made up 21.3% of total imports, becoming the largest category in 2009 ahead of machinery, which had been the largest import area in 2008.
For 2009, the largest growth (relative to 2008) for significant export sectors, apart from unclassified goods, was for fruit and nuts (2.9%), but the number-one sector was precious or semi-precious stones, at 24.8% of the cumulative total. The largest import growth among the major goods took place for pharmaceutical products (3.4%).
Most of South Africa’s trade happens with the Far East, Germany and the US (Tables 7 and 8). In 2008, Japan, the US and Germany were, in descending order, the country’s top export markets, while top import markets were Germany, China and the US.
South Africa recorded a new record deficit of R17.38-billion for its trade with non-Southern African Customs Union trading partners in January 2009. The data showed a dramatic tail-off in exports. October 2007’s R14.7-billion deficit was the previous worst ever.
However, exports bounced back again in February 2009 to increase 21.5% monthon- month to R44.062-billion. South Africa recorded a surprise trade surplus of R3.221‑billion for its trade with non-Southern African Customs Union trading partners in June 2009 after the R2.02-billion surplus of May 2009. South Africa then recorded a trade surplus of R446.758-million in July 2009. But the performance remains volatile and a R3.331-billion deficit was recorded in January 2010 from a surprise R3.669-billion surplus in December 2009.
Trade in South Africa has picked up markedly over the past decade. In 1998, exports only added up to R144.9-billion and they ended 2008 at a very healthy R663.099-billion by comparison, although an overall deficit of R64.5‑billion was seen.
Despite the global recession, South Africa’s foreign trade with Asia remained robust and confirms the strong trends noticeable in the first quarter of 2008. While between 2008 and 2009 growth in South African exports tailed off due to the global recession, of the major trading partners the most significant growth occurred with China (36.4%), Switzerland (44.1%), Hong Kong (53.8%) and Kenya (24.9%). While imports are down due to the global recession, China moves up as the number-one import country from second position in 2008 (-14.1%) and Germany is second from first in 2008 (-23.5%).
In mid-2009, South Africa ranked 61 out of 121 countries from 59th out of 118 in 2008 in the World Economic Forum’s Global Enabling Trade Report, ahead of other emerging markets such as India (76), Brazil (87) and Russia (109). It came in third in Southern Africa, behind Mauritius (33) and Namibia (60).
Foreign direct investment and competitiveness
Investment figures for 2009-2010 are expected to be strengthened by public-sector infrastructure investment. Projections are that the World Cup could add around 0.2% to 1% to GDP. The ratio of fixed-capital investment to GDP has risen consistently over the past five years to stand at 22.5% by late 2009. Growth in real gross fixed-capital formation dropped from 16.3% in 2007 to 11.7% in 2008 and struck -4.1% in the third quarter of 2009.
SA has held on to its position as the 45th most competitive country in the 2009/10 World Economic Forum’s Global Competitiveness Index, making it the highest-ranked country in sub- Saharan Africa. The country’s reporting and auditing systems are reported to be the second best in the world, with only Hong Kong scoring higher. SA has been rated as one of the continent’s top innovators, according to the Africa Competitiveness Report, which reviews the degree of competitiveness of Africa’s economies. Rated as being on a par with innovative countries such as India and Brazil, South Africa is credited as having high-quality scientific research institutions, strong investment in research and development, and a significant level of collaboration between business and universities in research.
With a score of 4.4 out of seven, South Africa comes in second, after Tunisia (4.4). South Africa ranks 34th in the World Bank and International Finance Corporation’s ‘Doing Business 2010: Reforming Through Difficult Times’, an annual survey of the time, cost and hassle involving in doing business in 183 economies around the world.
South Africa’s advanced financial systems helped improve the country’s rating in the annual Index of Economic Freedom, where it was graded the 61st freest economy of 179 countries. The index, published by The Wall Street Journal and US think tank the Heritage Foundation, uses 10 benchmarks to measure the economic success of 179 countries.
South Africa has been identified as a key emerging market for global investors, moving up to fourth from eighth position in a survey conducted by the Economist Intelligence Unit for UK Trade and Investment, the British government’s international business development agency.
