Country Report South Africa February 2009

Outlook for 2009-10

• South Africa's next general election—to be held on April 22nd—is almost certain to return another African National Congress (ANC) government.
• South Africa's president-in-waiting, Jacob Zuma, may face a third corruption trial in August, following the election, but this is unlikely to prevent him from becoming president if the ANC wins.
• ANC rebels, angered by the "left-wing" takeover of the ruling party, will contest the election under the Congress of the People (Cope) banner but will struggle to secure a mass defection of voters from the ANC
• Given quickly declining business and consumer confidence, the government's fiscal stimulus package will have a limited effect and the economy is now expected to contract by 0.8% in 2009, before recovering in 2010.
• The rand will make up some of its recent losses against the US dollar, but will depreciate to average R9.5:US$1 in 2009 and R10.1:US$1 in 2010.
• Inflation is now forecast to subside to 6% in 2009 and 5.4% in 2010, helped by the introduction of a new, re-weighted price index in January 2009 and weaker international commodity prices, for oil in particular.
• After an increase in 2008, to 7.6% of GDP, the current-account deficit is forecast to narrow to 7% of GDP in 2009 and 6.3% of GDP in 2010.

Monthly review

• The National Prosecuting Authority won a key appeal in January allowing corruption charges to be reinstated against Jacob Zuma. He will next appear in court in August, after the election, to try to get the case dropped.
• The South African Reserve Bank cut the benchmark interest rate by 100 basis points to 10.5% in February, the second reduction in two months, in response to falling inflation and weaker economic growth.
• The banks and the tax authorities have agreed a new co-operation deal aimed at improving tax compliance by banks and their clients.
• The competition amendment bill continues to be controversial. The legislation may now go to the constitutional court for adjudication.
• Owing to the economic downturn, the manufacturing and retail sectors continued to contract in late 2008. The vehicle market has also suffered from weak demand.
• The authorities have cut their estimate of the country's trade deficit in 2008, after errors in the original data were corrected.

Source: Country Report

This report covers the following industry codes:
SIC Code: 37
NAICS Code: 336