Country Report South Africa December 2008

Outlook for 2009-10

• The interim president, Kgalema Motlanthe, will serve in a caretaker capacity (following Thabo Mbeki's resignation) until next year's election, but will most probably be replaced by Jacob Zuma after the ballot.
• ANC rebels, angered by the "left-wing" takeover of the ruling party, are on the verge of forming a new party to contest next year's ballot. They will struggle, however, to secure a mass defection of voters from the ANC's ranks.
• No major economic policy shifts are envisaged. Boosting economic growth and investment in order to generate employment will remain the primary focus. The ANC promises to maintain fiscal and monetary discipline.
• Economic growth is expected to fall from 3.2% in 2008 to 1.2% in 2009, owing to weak household demand and a global downturn, before rebounding to 3.6% in 2010, helped by the hosting of the football World Cup.
• Inflation is now forecast to average 11.4% in 2008, owing to food, oil and electricity price pressures, before subsiding to 7.3% in 2009 and 6% in 2010, helped by the introduction of a new, re-weighted price index in January 2009.
• The current account is forecast to remain deeply in deficit because of surging demand for imported goods and services, despite strong export growth

Monthly review

• The rebellion by ANC rebels is gathering momentum, after a successful convention in Sandton. The new partylikely to be called the Congress of the People (Cope)--will be launched formally on December 16th.
• After a series of legal setbacks for the government, the telecoms regulator now plans to issue enhanced digital licences to all sector operators, which will boost competition and investment.
• The new public works minister has withdrawn two controversial pieces of legislation: the expropriation bill and the built environment professions bill.
• The government will continue to offer significant support to the auto industry under the new Automotive Production and Development Programme (APDP).
• Real GDP growth tumbled to 0.2% in the third quarter (on a seasonally adjusted basis), owing to a sharp slide in the manufacturing, retail and mining sectors. Construction and agriculture continued performing strongly.
• Two ratings agencies, Fitch and Standard & Poor's, have revised South Africa's outlook from "stable" to "negative", although a third, Moody's, maintains a "positive" outlook.

This report covers the following industry codes:
SIC Code: 49;60;37
NAICS Code: 22;52;336