Economy Of South Africa Economics Essay

Economy Of South Africa Economics EssaySouth Africas preservation is the capaciousst in Africa and is 24 of its gross domestic product in terms of PPP.A quarter of the population is unemployed and real unemployment rove is 40. South Africa has a comparative advantage in agriculture, mining and various manufacturing products. It has shifted from a primary and secondary economy to an economy driven primarily by the tertiary sector which accounts for an estimated 65% of GDP. Its economy is fair diversified with key stinting sectors including mining, agriculture and fishery, vehicle manufacturing and assembly, food- cognitive processing, clothing and textiles, telecommunication, energy, financial and business services, real estate, tourism, transportation, and wholesale and retail flip.The unemployment rate is over 25%, and the worthless have limited access to economic opportunities. Including this many have it offs such as crime, have in turn hurt investment funds and harvest-f estival, having a negative emergence on employment. Crime is considered a major constraint on investment. South Africa has struggled through the late 2000s recession, and the recovery has been largely led by private and everyday consumption growth, while export volumes and private investment have yet to fully recover. The long-term potential growth rate of South Africa under the modern policy environment has been estimated at 3.5%.Per capita GDP growth has proved mediocre, though improving, growing by 2.2% over the 2000-09 decade.This is a table of the trend of South Africas primitive domestic product at market prices estimated by theInternational financial FundYearGDP, USD blnUS Dollar Exchange in early JanuaryUnemployment ratePer Capita Income,% of USA198080.5470.8267 Rand9.222.6198557.2732.0052 Rand15.59.81990111.9982.5419 Rand18.813.11995151.1173.5486 Rand16.713.22000132.9646.1188 Rand25.68.52005246.9565.6497 Rand26.712.42010363.6557.462 Rand24.915.52015 (fcast)510.93722.81 8.0Economic overview of South Africa (Sector wise)Natural resourcesMining has been the main driving force behind the history and development of Africas most advanced and richest economy. Large master mining started with the discovery of a diamond on the banks of the Orange River in 1867 by Erasmus Jacobs and the subsequent discovery and exploitation of the Kimberley pipes. The Witwatersrand Gold Rush and the subsequent speedy development of the gold field are the biggest of all. Though minings contri aloneion to the national GDP has fallen from 21% in 1970 to 6% in 2011, it represents 60% of exports. The mining sector accounts for up to 9% of value added.In 2008, the expanses estimated share of earthly concern platinum production amounted to 77% kyanite and other materials, 55% chromium, 45% palladium, 39% vermiculite, 39% vanadium, 38% zirconium, 30% manganese, 21% rutile, 20% ilmenite, 19% gold etc. It also accounted for nearly 5% of the worlds polished diamond production. The countrys share of world reserves of platinum metals amounted to 89% hafnium, 46% zirconium, 27% vanadium, 23% manganese, 19% rutile, 18% fluorspar, 18%. It is worlds third largest exporter of coal.Agriculture and food processingThe agricultural manufacturing contributes 10% of formal employment, relatively subaltern compared to other parts, as well as providing work for laborers and contributing 2.6% of GDP. Due to the aridity of the land, besides 13.5% can be used for crop production. Agriculture sector face problems of increased foreign competition and crime. Maize production, which contributes to a 36% has also experienced negative effectuate due to climate change.South Africas critical exports include edible fruit and nuts, beverages, preserved food, tobacco, cereals, wool , miscellaneous food, sugar, meat, milling products and starch. Important imports include cereals, meat, soya-bean oil color cake, soya-bean oil and its fractions, tobacco, palm oil and its fractions, spi ces, coffee, tea, and preserved food. The competitive pressures from China and India endpointed in decline of exports for the food, textiles and paper sub-sectors.ManufacturingThe manufacturing industry contributes just 13.3% of jobs and 15% of GDP. Labor comprises are low, and the cost of the transport, communications and general living is higher. The automotive industry is about 10% of South Africas manufacturing exports, contributes 7.5% to the countrys GDP. BMW, Ford, Volkswagen, Daimler-Chrysler, General Motors and Toyota all have production plants in South Africa and the large component manufacturers are Arvin Exhaust, Bloxwitch, Corning and Senior Flexonics. Companies producing in South Africa can take advantage of low production costs and access to new markets due to trade agreements with the European Union and the Southern African Development Community.Service industryTelecommunications infra construction provides efficient service to urban areas as to cellular and intern et services. In 1997, Telkom, was partly privatised and entered into a strategic equity partnership with SBC, a U.S. telecommunications company. In exchange of providing certain services for 5 years, Telkom assumed an obligation to facilitate earnings modernisation and expansion into the unserved areas. Five companies provides service to 20 million subscribers and South Africa considered to have the 4th most advanced mobile telecommunications network worldwide.Business process outsourcingSouth Africa and particularly the mantle Town region established itself as a successful Call center and business process outsourcing destination with a highly talented pool of productive labor. The Carphone warehouse, Delta airlines and others have established inbound call centers within Cape Town as a means of utilizing Cape Towns low labor costs and talented labor.TourismSouth Africa is a popular tourist destination, with around 860,000 arrivals per month. Revenue equaling between 1% and 3% of G DP is generated by the tourism industry. Among the main attractions are the picturesque culture, the game reserves and local wines.Financial servicesThe country has a sophisticated financial structure with the JSE Securities Exchange, a large and active stock exchange in terms of total market capitalization as of March 2009. The banking industry regulated by the South African Reserve Bank is dominated by four local players Nedbank, ABSA, Standard Bank and First Rand. Banks operating in South Africa, when left field with short of liquidity, need to borrow from the SARB at a fluctuating repo rate.Income DistributionSouth Africa is affected by vast differences in incomes and wealth. The high level of general income inequality has accentuated the countrys Gini coefficient increased by four percentage points, and income has concentrated in the top decile. Rural mendicancy rates remain higher than those in urban areas, urban poverty rates are rising and rural rates seem to be falling. B etween-race inequality also remains a central issue and many blacks in the country still live in poverty.National Income Dynamics Study (NIDS) data suggests that 47% of South Africans live below the poverty line 56% of blacks live in poverty compared to 2% of whites. Human Poverty Index ranked South Africa 85 out of 135 countries. A 2011 study published by the University of Cape Town found that nearly 40% are black, where this group had once been almost exclusively white. While only 29% of the absolute wealthiest South Africans are black, this jumps to 50% among the entry-level.Current Economic scenario TrendsMonetary PolicyThe primary objective of monetary policy in the country is to achieve and maintain price stability and balanced economic development. Price stability reduces uncertainty and therefore, provides a favourable environment for growth and employment. Moreover low inflation contributes to the protection of the purchasing power of all South Africans specially poor. The Bank has full operational autonomy. Monetary policy is set by the Banks Monetary Policy Committee,which conducts monetary policy within a flexibleinflation-targeting framework andit allows for inflation to be out of the target range as a result of first-round effects of a supply shock. This flexibility does not relieve the Bank of its responsibility with respect to returning inflation to within the target range but allows for interest rate smoothing over the cycle.GDP Growth point of South AfricaGDP % (Yearly)Year1999200020012002200320042005200620072008200920102011GDP %0.632.631.93.54.955.13.1-1.82.83.1Inflation Rate of South AfricaInflation rate (consumer prices) (%)Year1999200020012002200320042005200620072008200920102011Inflation rate5.55.35.89.95.94.5456.511.37.24.55Unemployment Rate of South AfricaUnemployment rate (%)Year199920002001200320042005200620072008200920102011Unemployment rate (%)3030373726.226.625.524.322.92423.324.9Imports of South AfricaImports (Billion $)Year1999 20002002200320042005200620072008200920102011Imports2627.628.126.633.8939.4252.9761.5390.5766.0177.04102.6Exports of South AfricaExports (Billion $)Year199920002002200320042005200620072008200920102011Export2830.832.331.836.7741.9750.9159.1586.1266.5476.86104.5Foreign Exchange rates in South Africa (Dec., 2012)Tthe comparison of South African rand with top ten countries as per trade.South African Rand1.00 ZARinv. 1.00 ZAREuro0.08759511.416206US Dollar0.1145458.730185British Pound0.07107714.06928Indian rupee6.2042470.16118Australian Dollar0.1092179.156089Canadian Dollar0.113488.8121Emirati Dirham0.4207362.37679Swiss Franc0.1061769.418325Chinese Yuan Renminbi0.713491.401561Malaysian Ringgit0.3490722.864742foreign Direct investmentForeign direct investment flows to South Africa from 43.6% in the first half of 2012 compared to the same period last year, while FDI rose by 5%. The decline in FDI to Africas biggest economy came amid an 8% drop in global FDI inflows because of heightened glob al economic uncertainty.The report said FDI inflows to South Africa fell to $1.7-billion in the first six months of 2012 , reflecting sluggish domestic economic growth as well as a slowdown in developed economies. The IMF forecasts South African GDP growth of 2.6% this year, and recently cut its 2013 growth forecast to 3% from a July task of 3.3%, due to its close links to struggling Europe. The IMF has also trimmed its 2012 forecast for Africa to 5% from 5.4% but raised its projection for 2013 to 5.7% from 5.3%.SOUTH AFRICA BALANCE OF TRADECUsersMicrosenseDesktopsouth-africa-balance-of-trade.pngSOUTH AFRICA INDUSTRIAL PRODUCTIONCUsersMicrosenseDesktopsouth-africa-industrial-production.pngIndustrial Production in South Africa increased 2.50 percent in October of 2012 over the same month in the previous year. Industrial Production in South Africa is reported by the Statistics South Africa. In South Africa, industrial production measures the output of businesses integrated in industr ial sector of the economy such as manufacturing, mining, and utilities.