Country Report South Africa

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Summary

The new ANC leader, Jacob Zuma, is in line to become the next national president in 2009, after Thabo Mbeki retires, although his prospects remain clouded by the reinstatement of corruption charges against him.
Corruption charges against Mr Zuma may not be resolved until after the April 2009 election. The outcome as regards the charges is far from clear, but the ANC's shift to the left is unlikely to be reversed.
Economic policy will focus on boosting economic growth and investment in a concerted effort to generate employment and reduce income disparities.
Real GDP growth is forecast to slow to 3.9% in 2008, owing to power shortages, high interest rates and global economic volatility, before picking up again to 4.4% in 2009 as preparations for the World Cup gather momentum.
Inflation is now forecast to average 8.2% in 2008, owing to the persistence of food and oil price pressures, before subsiding to 6% in 2009.
The current account is forecast to remain deeply in deficit because of surging demand for imported goods and services, despite strong export growth. Capital inflows will continue to finance the shortfall.

Violence swept through Gauteng townships in May as angry mobs attacked immigrants, reflecting competition for scarce jobs, housing and services. Mr Mbeki has ordered the deployment of troops to help to restore order.
Jacob Zuma's new corruption trial faces fresh delays. The planned hearing in August will now be a preliminary session, and is likely to set a new date for the full trial.
An electricity summit between the government, trade unions and businesses agreed that prices need to double, but over five years, not two (as demanded by Eskom). The final decision lies with the sector regulator.
Anti-competitive policy, aimed at cracking down on cartels and over-pricing, has become stricter and several firms have been fined in 2008.
South Africa's financial system remains stable, but bad debts are rising fast (from a low base) and need to be monitored.
Bharti-Airtel, the Indian subcontinent's largest mobile phone firm, is trying to secure a controlling stake in MTN, but there are numerous obstacles. The high price tag of US$20-25bn would make the deal the largest-ever outward flow of FDI from India.