The document provides an overview of the macroeconomic environment and key indicators of South Africa. It discusses South Africa's GDP, which contracted 1.3% in the second quarter of 2015, as well as consumer inflation rates and unemployment levels. Several sectors are highlighted as driving the economy, including finance, mining, and manufacturing. Opportunities for investment are also listed across sectors such as IT, textiles, and agro-processing. Fiscal and monetary policies, including government spending, taxation rates, and trade data, are reviewed. Doing business in South Africa is examined, finding some regulatory differences between major cities.

1. Macro Economic Environment
Of
SOUTH AFRICA
Prepared by:
Malay Kumar

2. CONTENTS
Background of the country
Macroeconomic Indicators
Monetary and Fiscal Policy
Doing Business in South Africa
Investment Opportunities
Effects of Euro Zone Crisis
Growth & Opportunities
Risks
Economic Forecasts

3. •Area 1,219, 090 km2
•Head of the State: President Jacob Zuma
•11 Official languages with English the business language
•Est. Population: 51.77 million
•Currency: One rand (R) = 100 cents = 0.076 USD
South Africa fast facts

4. South Africa Economy
Currency: Rand (R)
Real GDP growth rate (second 2015): decreased by 1.3% q/q
Ranking in terms of GDP size: 25th largest in the world
Consumer inflation rate (July 2015): 5.0% y/y
Producer inflation rate (January 2015): annual rate fell to 3.5% in January
2015 y/y
Prime bank overdraft lending rate (July 2015): 9.5%
Labour force (July 2015): 15.7 million people employed
Unemployment (July 2015): 5.2 million unemployed and 15.1 million not
economically active
Read more: http://www.southafrica.info/about/facts.htm#economy#ixzz3oT6fs9ir

5. South Africa Economy
GDP composition by sector (2015):
agriculture 2%, finance 22%, government 17%, trade 15%, manufacturing
13%, transport and communication 10%, mining 8%, personal services 6%,
construction 4%, utilities 4%
Key industries:
Mining (world's largest producer of platinum, chromium), automobile
assembly, metal- working, machinery, textiles, iron and steel, chemicals,
fertilisers, foodstuffs, commercial ship repair.
Main trading partners (2012)
Exports – China 8.3%, US 8.1%, India 7.8%, UK 7.2%, Japan 5.4%, Germany
4.9%, Zimbabwe 2,6%, Netherlands 2.3%, Switzerland 2.1%, Mozambique
1.4%
Imports – China 13%, Germany 7.4%, US 6.9%, Saudi Arabia 6.7%, UK
5.5%, Nigeria 5.3%, India 4.1%, Japan 2.9%, Italy 2.3%

Read more: http://www.southafrica.info/about/facts.htm#economy#ixzz3oT7eMap2

6. South Africa- global perspective
 Cape Town was named the 10TH in ranking in top 10 tourist
destination in the world in the 2015 Traveler’s Choice
Destinations awards.
 South Africa is the only African country that is a member of
the G20
 South Africa is also a non permanent member on the UN
Security Council
 O R Tambo airport is the best airport in Africa, according to
the World Airport Awards 2014. It was also in the top 3 most
improved airports in the world for the same period
Source: SouthAfrica.info

7. South Africa- global perspective
 Stellenbosch University was the first African
university in the world to design and launch a
microsatellite.
 The Western Deep Level mines are the world’s
deepest mines at approaching 4km.
 South Africa houses one of the three largest
telescopes in the world at Sutherland in the
Karoo.
 SA has 45 million active cell phones (population
51.77 million) – ranking in the top 5 globally in
terms of cell phone coverage.
Source: SouthAfrica.info

8. MACROECONOMIC INDICATORS
• GDP: 349.8 billion USD
• GDP Growth: -1.3% 2015 q/q
• GNP: 2932656 ZAR Million in 2nd q 2015
• Gross National Income: 367019 million USD (2014)
• GDP per capita PPP: 12446 USD 2014
• GNI per capita: 7190 USD 2014
http://www.tradingeconomics.com/south-africa/gross-national-product
http://data.worldbank.org

9. GDP OF SOUTH AFRICA 2015
http://www.tradingeconomics.com/south-africa/indicators

10. MACROECONOMIC INDICATORS
The Gross Domestic Product (GDP) in South Africa was
worth 349.82 billion US dollars in 2014. The GDP value of
South Africa represents 0.56 percent of the world economy.
GDP in South Africa averaged 123.91 USD Billion from 1960
until 2014, reaching an all time high of 416.60 USD Billion in
2011 and a record low of 7.36 USD Billion in 1960.
GDP OF SOUTH AFRICA 2006-2014

11. The Gross Domestic Product (GDP) in South Africa
contracted an annualized 1.30 percent in the second
quarter of 2015 over the previous quarter. GDP Growth Rate
in South Africa averaged 3.02 percent from 1993 until 2015,
reaching an all time high of 7.60 percent in the fourth
quarter of 1994 and a record low of -6.10 percent in the first
quarter of 2009.

12. AGGREGATE DEMAND OF SOUTH
AFRICA (2015-Q2)
• It is the first contraction in five quarters due to drop in manufacturing,
mining and agriculture.
• The shift for aggregate demand from AD to AD1 is a result of the rise in
unemployment, the people have less spending power and therefore
there is an overall decrease in consumer demand.
AD = C + I + G + (X-M)
• The red rectangle represents the
inflationary response in the
economy as a result of the shift
in aggregate supply
• So as a whole the South African
economy has retracted as
output has significantly
decreased and there has been
an inflationary response, as the
price level has increased.

13. Consumer Spending
• Consumer Spending in South Africa increased to 1860255 ZAR
Million in the second quarter of 2015 from 1856394 ZAR Million in
the first quarter of 2015.
• Consumer Spending in South Africa averaged 878699.85 ZAR
Million from 1960 until 2015, reaching an all time high of 1860255
ZAR Million in the second quarter of 2015 and a record low of
260612 ZAR Million in the first quarter of 1960
• Consumer Spending in South Africa is reported by the South
African Reserve Bank.
KEY FINDINGS FOR THE SECOND QUARTER OF 2015
http://www.statssa.gov.za

14. KEY FINDINGS FOR THE SECOND QUARTER OF 2015
http://www.statssa.gov.za
Government Spending
• Government Spending in South Africa increased to 616232 ZAR
Million in the second quarter of 2015 from 615646 ZAR Million in the
first quarter of 2015.
• Government Spending in South Africa averaged 299409.23 ZAR
Million from 1960 until 2015, reaching an all time high of 618660
ZAR Million in the fourth quarter of 2014 and a record low of 65991
ZAR Million in the first quarter of 1960.
Investments
• Investment in South Africa decreased to 1607 ZAR Billion in the
second quarter of 2015 from 1619 ZAR Billion in the first quarter of
2015
• Investment in South Africa averaged 345.75 ZAR Billion from 1956
until 2015, reaching an all time high of 1624 ZAR Billion in the third
quarter of 2014

15. KEY FINDINGS FOR THE SECOND QUARTER OF 2015
http://www.statssa.gov.za
Exports
• Exports in South Africa decreased to 87631.76 ZAR Million in August
from 93084.33 ZAR Million in July of 2015.
• Exports in South Africa averaged 13813.99 ZAR Million from 1957
until 2015, reaching an all time high of 93084.33 ZAR Million in July
of 2015 and a record low of 55.80 ZAR Million in August of 1958.
Imports
• Imports in South Africa increased to 97758.89 ZAR Million in August
from 94198.02 ZAR Million in July of 2015.
• Imports in South Africa averaged 14273.31 ZAR Million from 1957
until 2015, reaching an all time high of 110321.85 ZAR Million in
October of 2014 and a record low of 66.10 ZAR Million in
September of 1961.

16. INFLATION OF SOUTH AFRICA 2015
The Consumer Price Index (CPI) and Producer Price Index
(PPI) are the two primary measures of inflation for South
Africa.
Both indicators are published on a monthly basis.
http://www.statssa.gov.za

17. KEY FINDINGS FOR THE SECOND QUARTER OF 2015
http://www.statssa.gov.za
• In South Africa, the most important categories in the consumer
price index are Housing and Utilities (24.5 percent of total
weight), Transport (16.4 percent) and Food and Non-Alcoholic
Beverages (15.4 percent).
• Consumer prices in South Africa rose 4.6 percent year-on-year in
August of 2015, easing from a 5 percent increase in July.
• It is the lowest inflation rate in three months and slightly below
market expectations as cost of housing and utilities slowed while
transport prices fell.
• Transport prices went down 0.7 percent, driven by a 7.6 percent
drop in petrol cost and a 5.5 percent fall in cost of private
transport operation.
• Prices of housing and utilities rose at a slower 6.3 percent, mainly
due to maintenance and repair and water and other services.

18. Structure of the economy
The largest industries, as measured by their nominal value
added in the second quarter of 2015, were as follows:
 Finance, real estate and business services – 20,5 per cent
 General government services – 16,9 per cent
 Wholesale, retail and motor trade, catering and
accommodation – 14,4 per cent
 Manufacturing – 12,5 per cent
http://www.statssa.gov.za

19. The Gross Domestic Product per capita in South Africa was
last recorded at 6086.45 US dollars in 2014. The GDP per
Capita in South Africa is equivalent to 48 percent of the
world's average. GDP per capita in South Africa averaged
5080.22 USD from 1960 until 2014, reaching an all time high
of 6090.27 USD in 2013 and a record low of 3543.52 USD in
1960

20. • GNP: 2932656 ZAR Million in 2nd q
2015
Gross National Product in South Africa decreased to 2932656
ZAR Million in the second quarter of 2015 from 2944705 ZAR
Million in the first quarter of 2015. Gross National Product in
South Africa averaged 1520155.22 ZAR Million from 1960 until
2015, reaching an all time high of 2944705 ZAR Million in the
first quarter of 2015 and a record low of 504385 ZAR Million in
the first quarter of 1960

21. FISCAL POLICY
FISCAL REVENUE VS EXPENDITURE

22. Government Spending in South Africa increased to 616232 ZAR Million in
the second quarter of 2015 from 615646 ZAR Million in the first quarter of
2015. Government Spending in South Africa averaged 299409.23 ZAR
Million from 1960 until 2015, reaching an all time high of 618660 ZAR
Million in the fourth quarter of 2014 and a record low of 65991 ZAR Million
in the first quarter of 1960.
Fiscal Policy
GOVERNMENT FUNDING AND TAXATION

23. PRICES AND TAXES OF SOUTH AFRICA 2015

24. The Personal Income Tax Rate in South Africa stands at 41
percent. Personal Income Tax Rate in South Africa averaged
40.08 percent from 2004 until 2015, reaching an all time high
of 41 percent in 2015 and a record low of 40 percent in 2005

25. FISCAL POLICY
BREAKDOWN OF REVENUE AND EXPENDITURE

26. FISCAL POLICY
BUDGET DEFICIT

27. TRADE AND GOVT SPENDING OF SOUTH AFRICA 2015

28. Doing Business in South Africa
According to the new report, local officials could
significantly improve their local and national business
climate by replicating good practices already being used
successfully in other cities in South Africa.
However, notable challenges remain. Firms across South
Africa still face inefficient and complex red tape securing
electricity, registering property and trading across borders.
South African entrepreneurs face different regulatory
hurdles depending on where they establish their businesses.
This is due to varying efficiency levels at the public agencies
in charge of the six areas benchmarked—starting a
business, dealing with construction permits, getting
electricity, registering property, enforcing contracts and
trading across borders—and discrepancies in the
interpretation of national legislation.
http://www.worldbank.org/en/country/southafrica

29. http://www.doingbusiness.org/Rankings/south-africa/
Doing Business in South Africa
A high ease of doing business ranking means the regulatory environment
is more conducive to the starting and operation of a local firm.

30. Sub-national Economy Rankings – South Africa
Doing Business in South Africa
Doing Business in South Africa surveys 9 locations finding
that it is easier to start a business in Ekurhuleni,
Johannesburg and Tshwane, deal with construction permits
in Cape Town, get electricity and enforce a contract in
Mangaung, and register property in Johannesburg.
http://www.doingbusiness.org/Rankings/south-africa/

31. There is no relationship between the size of the city (as
measured by population) and the rankings, and no single city
performs equally well on all indicators. Johannesburg and Cape
Town, the largest urban centers, are the top performers on
registering property and dealing with construction permits,
respectively, while Mangaung, the second least populous city,
leads the getting electricity and enforcing contracts indicators.
Starting a private company is easier in Tshwane, Johannesburg
and Ekurhuleni, where it takes 6 procedures, 46 days and costs
0.3% of income per capita.
Dealing with construction permits is easier in Cape Town and
Nelson Mandela Bay and more difficult in Johannesburg and
Mangaung. The number of steps required range from 15 in Nelson
Mandela Bay to 22 in Mangaung.
http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Fact-
Sheets/SubNational/DB15SouthAfricaFactsheetEnglish.pdf
Doing Business in South Africa

32. Getting an electricity connection across South Africa’s cities
takes on average the same number of procedures as in OECD
high-income economies, but it is more expensive and the process
takes twice as long.
For property registration, differences in implementation exist
despite the shared national legislative framework—it takes 24
days to register property in Buffalo City, but 52 days in Mangaung.
It is easier to enforce a contract in Mangaung— resolving a
commercial dispute there requires 29 procedures, takes 473 days,
and costs approximately 29.4% of the claim value.
South African ports perform better than their regional peers but
are slow and expensive when compared globally—long dwell
times and high inland transportation and port costs are the main
obstacles for traders.
http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Fact-
Sheets/SubNational/DB15SouthAfricaFactsheetEnglish.pdf
Doing Business in South Africa

33. Investment Opportunities
Sector Sub-sector
Business Process
Outsourcing & IT
Enabled Services
•Call Centres
•Back /office Processing
•Shared Corporate Services
•Enterprise solutions e.g. fleet management and asset
management
•Legal process outsourcing
Electro Technical •Software & mobile applications
•Smart metering
•Embedded software
•Radio frequency identification
•Process control , measurement & instrumentation
•Security & monitoring solutions
•Financial software
Clothing,
Textiles, Leather
and Footwear
•Manufacturing of Industrial Textiles using Polyester
•Production of other natural fibre textiles such as flax
•Wool and mohair production – downstream opportunities for
yarns, knitwear and fabric.

34. Investment Opportunities
Sector Sub-sector
Agro-processing Fisheries and aquaculture i.e. freshwater aquaculture & marinculture
Food processing in the milling and baking industries
Beverages viz. fruit juices and the local beneficiation, packaging and
export of
indigenous teas
High value natural fibres viz., organic cotton & downstream mohair
production
High value organic food for the local and export market
Biofuels production viz. biodiesel & bioethanol
Automotives &
Components
Engine parts/components, vehicle interiors, electronic drive train
components, body parts, catalytic converters, aluminum forgings &
castings, diesel particulate filters and leather products
Chemicals and
plastic fabrication
Beneficiation of polypropylene used in automotive components &
building and
construction industries, packaging materials
Medical (drips & syringes), manufacture of active pharmaceutical
ingredient
(APIs) for key anti-retrovirals (ARVs)
Manufacture of reagents for AIDS/HIV diagnostics
Production of vaccines and biological medicines

35. Sector Sub-sector
Tourism •Accommodation – hotels, boutique hotels, lodges & resorts
•Urban integrated tourism/ entertainment precincts
•Adventure, - eco-, sport-, conference - and cultural tourism.
•Infrastructure development.
•Leisure complexes & world class golf courses.
•Harbour & waterfront developments.
•Transfrontier conservation areas.
•Tourism transport – aviation, rail, cruise liners etc
•Green building and green technologies for tourism
•Attractions and activity – based tourism
•Museums and heritage
•Cultural, music, arts festivals and events
Aerospace •Aviation related services, including maintenance, repair and overhaul
(MRO)
•Rotary and fixed wing components.
•Aviation training services
•Specialised manufacturing of avionics, including health usage monitoring
systems
•Aerostructure components, specifically composites and sheet metal
(aluminium and titanium)
•Small and micro-satellite capability including sensor platforms
•Satellite related services (including tracking and control and applications
development)
•Specialised design expertise, systems level as well as first tier level.
•Unmanned Arial Vehicles (UAVs)
Investment Opportunities

36. Investing in Africa: an improving environment
The operating environment is improving visibly and rapidly …
• 54 countries, 35 democracies (compared to only 8 in
1991)
• Many countries have improved their business
environment:
restored macro-economic stability
greater predictability & increased reliability of policy
& regulatory framework
increased transparency and improved decision-
making
privatisation initiatives
reduced corruption
investment protection & promotion
intra and inter-regional initiatives
 High returns on investment

37. Effects of Euro Zone Crisis on South
Africa
The euro zone crisis posed a serious and real
threat to South Africa’s economy.
South Africa businesses had estimated a loss of
US$ 15 billion in revenue in January 2013.
This was a result of the crisis.
With 4 out of every 10 businesses affected on a
global scope, there was an increase in the
number of businesses that chose to make
investment elsewhere.
Grant Thornton’s published a report on the issue.
It is estimated that the crisis wiped out $ 2trillion
off revenues.http://www.southafrica.info/news/eurozone-040113.htm#.Vh4sZTa

38. This was on the global scope and the effect
would have a long term effects for EU.
This will in turn lead to carry out less trade in the
country.
Towards the end of November 2011, 505 of
finance professionals in South Africa felt the
euro crisis.
It had impacted their businesses negatively.
28% claimed they expected their businesses to
get affected by the crisis.
South Africa benefiting from Euro trade
therefore dampened.
Effects of Euro Zone Crisis on South
Africa

39. Growth & Opportunities
South Africa unpacks Coega potential
In the 2014/15 financial year, the Coega Development Corporation (CDC)
industrial development zone (IDZ) in Eastern Cape contributed 14 623 direct
jobs to the South African economy; it also has 29 operating investors with an
investment value of more than R2.7-billion.
The manufacturing capability of wind turbine stands guarantees South
Africa's relevance into the energy mix. The renewable energy mix provided by
Coega can create the need for technology and related infrastructure.
The CDC has built momentum on energy projects in both conventional
energy and renewable energy so as to attract and sustain its investment
projects.
Energy projects under construction include the Dedisa Peaking Power Plant,
which is estimated to start operating in the second half of 2015 and consists of
two open- cycle gas turbines able to produce 342 megawatts.
http://www.southafrica.info/business/investing/opportunities

40. A billion dollars to invest in Africa
Growth & Opportunities
That's the message from TPG Growth and Satya Capital, which announced a
billion- dollar investment partnership in Africa on 18 June.
The money will be provided by TPG Growth, which will look for companies and
entrepreneurs in all sectors that are in need of capital to help them grow,
including in health care, technology, media and telecommunications, consumer
and financial services.
While Satya normally targeted investments of between $20-million and $150-
million, this partnership would allow it to broaden the scope to between $1-
million and $200-million.
R10bn boost for SA's Saldanha Bay
A R9.65-billion investment in infrastructure projects at Saldanha Bay, on South
Africa's West Coast, was announced by the Transnet National Ports Authority
These are aimed at enhancing the deep-water port's ability to service the
offshore oil and gas industry.
The project falls under the government's "blue economy" plans of its Operation
Phakisa initiative, announced by President Jacob Zuma in 2014. The aim of the
project is to clear infrastructure bottlenecks that may be constraining economic
growth.

41. South Africa's hospitality sector 'poised for growth'
Growth & Opportunities
South Africa's hospitality sector is poised for further growth in the
next five years on the back of rising room rates and growing tourism
numbers, according to a report released by
PricewaterhouseCoopers (PwC)
PwC's "South African Hospitality Outlook: 2014-2018" projects that
the overall occupancy rate across all sectors in South Africa will rise
to an estimated 58.4% by 2018, with total room revenue expected to
reach R28.7-billion, a 10.7% compound annual increase over 2013.
Despite the recent economic uncertainty, the total number of
foreign overnight visitors to South Africa rose by 3.9% in 2013, down
from the 10.2% increase in 2012, but still reflecting continued growth
in foreign travel to South Africa.
"Tourism is considered to be a key element in South Africa's
economy, and is recognised in the National Development Plan as
an important driver of economic and employment growth,"

42. Africa's mobile boom: 'huge opportunities'
Growth & Opportunities
Sub-Saharan Africa's mobile industry has been the fastest growing region in the
world for mobile users in the past five years, according to a report published by
the GSMA, the body representing mobile operators worldwide
The region's mobile subscriber base has grown by 18% a year over the past five
years to 253-million unique users and 502-million connections. GSMA forecasts in
their report, "Sub-Saharan Africa Mobile Economy 2013", that mobile users in the
region will be closer to 346-million within the next five years.
The mobile industry currently contributes more than 6% of Sub-Saharan Africa's
gross domestic product (GDP) - higher than any other comparable region
globally, according to the report. This contribution is expected to rise from $60-
billion in 2012 to $119-billion, or more than 8% of GDP, by 2020.
Mobile solutions are used to address a range of socio-economic challenges in
Sub-Saharan Africa. According to the GSMA, there are almost 250 mobile health
services in operation across the region. These support patients who may not
have access to local healthcare services.

43. The geopolitical risk of increasing corruption is at the top of
the pile of risks affecting the South African landscape. It has
both the highest likelihood and consequence rating for the
entire risk profile
Risks
https://c.ymcdn.com/sites/irmsa.site-ym.com/resource/resmgr/2015_Risk_Report/Low_Res_IRMSA_South_Africa_R.pdf

44. The Special Investigating Unit (SIU) estimates that 20-25% of state
procurement, representing approximately R180 billion, is lost each year
due to corruption
It furthermore distorts market competition, increases the cost of doing
business and decreases the ease of conducting business
South Africa’s rampant, increasing crime rates continue to impact
business and civil society in a manner that erodes the nation’s psyche on
a daily basis
The 2014 Global Economic Crime Survey shows that nearly 70% (Q1:
2014) of business executives in the private and public sectors have
experienced some form of economic crime
Risks

45. According to Statistics South Africa, the unemployment rate is
around 25%, which translates into approximately 5,2 million
unemployed persons
Risks
https://c.ymcdn.com/sites/irmsa.site-ym.com/resource/resmgr/2015_Risk_Report/Low_Res_IRMSA_South_Africa_R.pdf

46. Additional Risks in the South African
Context
1. Skills Shortage
2. Increasing Strike
Action
3. Ebola Virus Outbreak
4. Insufficient Electricity
Supply
5. Lack of Innovation
6. Economic Slowdown
7. Banking Reputational
Risk

47. South Africa | Economic Forecasts | 2015-2050
Outlook

48. PROPOSED INTERVENTIONS TO
EXPAND ECONOMIC OPPORTUNITIES:
• Investing in and improving infrastructure, as well as
supporting industries such as mining and agriculture
• Diversifying exports
• Strengthening links to faster-growing economies
• Enacting reforms to lower the cost of doing business
• Reducing constraints to growth in various sectors
• Moving to more efficient and climate-friendly
production systems
• Encouraging entrepreneurship and innovation

49. Thank You