South Africa


  • Service: Advisory, Risk & Compliance, Financial Risk Management
  • Industry: Financial Services
  • Type: Business and industry issue
  • Date: 2009/09/09

Economic Insight Quarterly Review Issue 7 Q1 2009 

Further knocks to Gross Domestic Product (GDP) expected in light of the global financial crisis. In the third quarter of 2008, real GDP growth came in at 2.9% year-on-year from the 4.4% year-on-year figure recorded in the second quarter.
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The global financial crisis has resulted in the downward revision of growth forecasts for the country. With some of the country’s major trading partners already under a lot of pressure from the crisis, this is likely to impact negatively on income from exports and affect the capital flows needed to finance a large current account deficit.


Other factors that are likely to affect South Africa’s growth prospects negatively include job losses as well as the likelihood of electricity cuts in 2009, based on indications that energy saved by means of voluntary energy savings (ie demand side management) have fallen below the required 10% level.


On the positive side though, the rise in infrastructure spending, changes in the inflation cycle and the expected interest rate cutting cycle will all go a long way towards softening the impact of the financial crisis on the South African economy.