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Country Forecast South Africa

  • ID: 2138616
  • Country Profile
  • August 2020
  • Region: South Africa, Africa
  • 50 Pages
  • The Economist Intelligence Unit
Background: South Africa became a full democracy in 1994, when it first held all-race elections. The African National Congress (ANC) won, and has dominated all subsequent elections-in 1999, 2004, 2009, 2014 and 2019. However, support ebbed steadily from a peak of nearly 70% in 2004, to 62.1% in 2014 and 57.5% in May 2019. The ANC feared a worse result in May 2019, but the installation of Cyril Ramaphosa as president in February 2018, replacing the scandal-tainted Jacob Zuma, provided a mild bounce. Mr Ramaphosa will now serve a full five-year term and will be eligible for a second term.

Political structure: South Africa is a constitutional democracy with a bicameral parliament and a president elected by parliament. The constitution is the supreme law. The National Assembly is elected by proportional representation; the National Council of the Provinces consists of indirectly elected representatives of the nine provinces. The judiciary is independent and includes an 11-member Constitutional Court. The constitution provides for an independent corruption watchdog-the Public Protector-and commissions on human rights, gender equality and restitution of land rights.

Policy issues: Boosting growth, creating jobs and reducing inequality-while maintaining fiscal and monetary discipline-are the main medium-term policy aims, but dealing with the impact of the coronavirus pandemic will take priority in the near term. Advances made under Mr Ramaphosa include restarting a private-sector-led renewable energy programme and reworking the mining charter, but other reforms, such as parastatal restructuring and labour market loosening, are being obstructed by divisions within the ANC. Strike risks will remain high, and skills shortages will endure, reflecting weaknesses in education. The environment for private enterprise will be broadly accommodating, with opportunities for public-private partnerships, but policy uncertainty will persist, including over land reform, owing to ANC backing for expropriation without compensation, albeit in limited cases. Competition law, a new national minimum wage and a new carbon tax are other challenges. The need to boost post-pandemic growth will allow Mr Ramaphosa to push ahead more forcefully with his reformist agenda after the immediate crisis fades.
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Country Forecast South Africa

South Africa--highlights: Political outlook

South Africa--highlights: Business environment outlook

South Africa--highlights: Economic outlook

South Africa--highlights: Demographic outlook

South Africa--highlights: Market opportunities

South Africa--highlights: Long-term outlook

Fact sheet

Political outlook: Political forces at a glance

Political outlook: Political stability

Political outlook: Political and institutional effectiveness

Political outlook: Election watch

Political outlook: International relations

Business environment outlook: Business environment rankings

Business environment outlook: South Africa's business environment at a glance
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
Taxes
Financing
The labour market
Infrastructure
Technological readiness

Business environment outlook: Macroeconomic environment

Business environment outlook: Policy towards private enterprise and competition
Private-sector opportunities will increase
Expropriation without compensation unsettles investors
Competition policy is becoming stricter

Business environment outlook: Policy towards foreign investment
Post-pandemic policy will favour public-private partnerships
A new legal framework for FDI

Business environment outlook: Foreign trade and exchange controls
Exchange controls will be liberalised in stages

Business environment outlook: Taxes
Fiscal constraints put upward pressure on taxes
Tax incentives to be pruned

Business environment outlook: Financing
Strong capital buffers protect against a squeeze on profits
A range of policy challenges

Business environment outlook: The labour market
Shortages of skilled workers will remain a key constraint

Business environment outlook: Infrastructure
Parastatal dominance will recede in the medium term
Long-term energy plan gives renewables a major role

Business environment outlook: Technological readiness
South Africa's ICT sector is a leader in Africa
Spectrum allocation faces delay

Economic forecast: Policy trends

Economic forecast: Fiscal policy

Economic forecast: Monetary policy

Economic forecast: International assumptions

Economic forecast: Economic growth

Economic forecast: Sectoral trends

Economic forecast: Inflation

Economic forecast: Exchange rates

Economic forecast: External sector

Economic forecast: Foreign direct investment in South Africa
Stocks and flows
Origin and distribution
Determinants
Impact
Potential

Demographic assumptions
South Africa's population will grow at a modest rate in 2020-24
Life expectancy will rise steadily
National health insurance advances
Rapid urbanisation will strain social services

Market opportunities: Market outlook
Consumer spending will stage a slow but steady recovery from recession

Market opportunities: Consumer expenditure

Market opportunities: Social indicators and living standards

Long-term outlook: The long-term outlook
The impact of HIV/AIDS will gradually dissipate in 2031-50
US-China confrontation poses risks
The quality of institutions will improve
Productivity gains will boost growth in the longer term

Long-term outlook: Long-term trends
Climate change and sustainability
Technological developments
Migration and urbanisation

Long-term outlook: Methodology for long-term forecasts
Growth projections
Definitions of variables
The independent variables include:
Summary of findings
Productivity growth

Data summary: Global outlook

Data summary: Gross domestic product, current market prices

Data summary: Gross domestic product, at constant prices

Data summary: Gross domestic product by sector of origin

Data summary: Growth and productivity

Data summary: Economic structure, income and market size

Data summary: Fiscal indicators

Data summary: Monetary indicators

Data summary: Employment, wages and prices

Data summary: Current account and terms of trade

Data summary: Foreign direct investment

Data summary: External debt

Data sources and definitions
Global data
Domestic data
Abbreviations

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

Indicator scores in the business rankings model
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