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Economic 360 for South Africa: Growth Prospects and Emerging Opportunities in the Manufacturing Industry
Frost & Sullivan, July 2011, Pages: 102
South Africa is a democratic Republic with a stable political system. The economic environment is forecast to remain stable, with policy focus on employment creation through growth and stability. The manufacturing industry in South Africa is well established with strong development in the automotive, chemical, iron and food and beverages sectors. Internationally South Africa’s manufacturing competitiveness ranks relatively weak, due to structural bottlenecks and outdated machinery. The South African government has developed various investment and development schemes for the manufacturing industry and moderate growth is expected for the manufacturing industry from 2011 to 2014.
Research Overview
South Africa’s economy grew modestly since 2004 but has weathered the economic downturn well and is expected to post a gross domestic product (GDP) of 3 to 4 per cent from 2011 to 2014. The motor industry was the hardest hit during the downturn, declining by 27.3 per cent from 2008 to 2009; however, several industries are shaking off the effects of the slowdown and are emerging as the country’s biggest growth engines. Some of these are the manufacturing, finance, real estate and business services sectors. Although manufacturing production in South Africa also took a hit, it rebounded in 2010 and is expected to grow at a compound annual growth rate (CAGR) of 2.1 per cent from 2011 to 2014. Manufacturers were also bogged down by the rising energy prices, as they affected production volumes and business strategy. Nevertheless, the economy will be bolstered by the strengthening of the local manufacturing sector due to the Government’s commitment to development; relatively high portfolio inflows, stimulating the finance, real estate and business services sectors; and the recovery of the building and construction sector. The Government is also focusing on giving a leg up to the country’s struggling export sector. Fortunately, the high FDI has limited the effect of climbing trade deficits on the current account. South Africa’s largest export sectors are the metals and steel, motor vehicles and chemicals sectors, and these export industries are highly reliant on the country’s natural resources and industrial incentive programmes.
The political climate in South Africa is expected to be stable in the next six to seven years and will not hamper the economic growth. The Government has unified fiscal and monetary policy commitments to promote economic growth and reduce the high levels of unemployment, which has been one of the biggest hindrances to the economic revival. An analysis of the major trade partners reveals a shift in trade toward China as the major trading partner to South Africa. It also indicates a major change in the exports and imports composition. While the share of manufacturing exports is steadily increasing, the share of mining exports is declining. The reduction in the share of manufacturing imports indicates the strengthening of the manufacturing sector, enabling the industry to become more competitive and export-orientated. The manufacturing industry has been identified in the South African Government’s New Growth Path and 2011 National Budget as instrumental to growth and creating employment in the country. A second Industrial Policy Action Plan and various other government incentive schemes are in place to further aid development in the manufacturing sector.
Economic 360 for South Africa: Growth Prospects and Emerging Opportunities in the Manufacturing Industry is Frost & Sullivan’s Country Industry Forecast service, which provides vital inputs for evaluating the attractiveness of a country and its chemicals industry. Apart from enabling decision makers to assess the impact of non-market forces, it also helps in identifying new market opportunities. This service provides a strong base for preparing contingency plans. In addition, investors can assess industry-specific risk factors as well as conduct a more in-depth micro research.
Benefits
The following benefits are offered by this research:
Identifying New Market Opportunities
The future trends and developments in the South African manufacturing industry have been identified by taking into consideration the economic environment of the country. The analysis will prove greatly informative to stakeholders in the industry.
Understand Future Industry Trends
This research service gives insights into the economic developments and trends in the manufacturing industry of South Africa. The economic climate, industry and infrastructure developments will give greater information about the dynamics of the market in the forecast period.
Comprehend Policy and Economic Environment
An analysis of the dynamics of economic growth in South Africa provides considerable insights into the economic parameters that will influence the industry. Industry performance is closely related to the level of economic growth and the structural dynamics of the economy are greatly helpful to industry participants.
Evaluate Industry Segment Potential
This study focuses on providing an analysis of country and industry trends and is informative to companies seeking to enter new geographic markets. The market and economic insights will also prove invaluable to corporate planners in the development of accurate business plans or the allocation of resources.
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