Business Monitor International


South Africa Business Forecast Report

Published 23 April 2014

  • 49 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
South Africa Business Forecast Report

Core Views:

  • BMI sees the South African economy posting tepid growth over the medium term, with real GDP expanding by just 2.2% in 2014. Our below-consensus view is predicated on several factors including tepid investment sentiment and the ongoing retrenchment in the domestic gold mining sector.

  • South Africa's current account deficit will remain sizeable over the coming years, with BMI predicting that it will remain over 5.0% of GDP in 2014. Inflows to the capital and financial account have propped up the balance of payments in recent years, but with investor appetite for South African bonds waning, this trend can no longer be assured.

  • The ANC's dominant position is coming under threat ahead of legislative polls in April 2014 . Dissatisfaction is rising among poor black South Africans who form the majority of the population. Nevertheless, we expect the AN C to win the election .

Major Forecast Changes:

  • We are now forecasting 50 basis points of interest rate hikes for the remainder of the year, while previously we expect rates to remain on hold. This view is predicated on increased inflation risks which the South African Reserve Bank is seeking to contain.

Key Risks To Outlook:

  • A sustained bout of global risk aversion with an attendant sharp outflow of portfolio funds. This would threaten South Africa's precarious balance of payments.

  • A sudden uptick in domestic political risk, such as an escalation of the industrial unrest that blighted various sectors in 2013.

  • A sustained period of high oil prices would exacerbate the already-sizeable current account deficit.

Forecast Table:

SOUTH AFRICA - MACROECONOMIC FORECASTS
2012 2013 2014f 2015f
Real GDP growth, % y-o-y 2 2.5 1.9 2.2 2.8
Nominal GDP, USDbn 2 382.5 350.8 341.6 406.7
Consumer price inflation, % y-o-y, eop 3 5.7 5.4 e 6.5 5.5
Exchange rate ZAR/USD, eop 4 8.47 10.49 10.30 9.27
...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Fico Presidency Puts Majority At Risk
8
Table: Political Table
8
Long-Term Political Outlook
9
Convergence With West Remains Core View
9
Chapter 2: Economic Outlook
11
SWOT Analysis
11
BMI Economic Risk Ratings
11
Economic Activity
12
Rising Exports To Spur Domestic Demand Recovery
12
Table: GDP BY EXPENDITURE
12
Balance Of Payments
14
Rebalancing Has Further To Run
14
Table: BALANCE OF PAYMENTS (Euro)
14
Fiscal Policy
16
Falling Deficit Masks Fiscal Risks
16
Table: FISCAL POLICY
16
Regional Exchange Rate Policy
18
Euro Strength Unsettling The ECB
18
Table: Eurozone Currency Forecast
18
Business Monitor International Ltd www
com 3
Contents
Contents
Regional Monetary Policy
20
ECB Cut: Pushing On A String
20
Operational Risk
31
Chapter 3: 10-Year Forecast
23
The Slovak Economy To 2023
23
Lower Trend Growth Ahead
23
Table: Long-Term Macroeconomic Forecasts
23
Chapter 4: Business Environment
25
SWOT Analysis
25
BMI Business Environment Risk Ratings
25
Business Environment
26
Introduction
26
Institutions
26
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
26
TABLE: BMI LEGAL FRAMEWORK RATING
27
TABLE: LABOUR FORCE QUALITY
28
TABLE: EMERGING EUROPE - ANNUAL FDI INFLOWS
29
TABLE: TRADE AND INVESTMENT RATINGS
30
Market Outlook
31
Table: Top Five Export Destinations (US$mn)
31
Chapter 5: Key Sectors
33
Autos
33
Table: Auto Sales, 2010-2017
33
Table: Auto Trade, 2010-2017
34
Table: Auto Production, 2010-2017
34
Food & Drink
35
Table: Food Consumption Indicators - Historical Data & Forecasts, 2010-2017
35
Table: Alcoholic Drinks Value/Volume Sales - Historical Data & Forecasts, 2010-2017
38
Table: Mass Grocery Retail Sales By Format - Historical Data & Forecasts, 2010-2017
40
Other Key Sectors
41
Table: Oil and Gas Sector Key Indicators
41
Table: Pharma Sector Key Indicators
41
Table: Freight Key Indicators
41
Table: Telecoms Sector Key Indicators
42
Table: Defence and Security Sector Key Indicators
42
Table: Infrastructure Sector Key Indicators
42
Chapter 6: BMI Global Assumptions
43
Global Outlook
43
Momentum To Continue In H114
43
Table: Global Assumptions
43
Table: Developed States, Real GDP GrowtH, %
44
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
44
Table: Emerging Markets, Real GDP Growth, %
45

The South Africa Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in South Africa and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of South Africa's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of South Africa's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise South Africa's country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in South Africa, including currency volatility, the commodity price boom and protectionist policies.

The South Africa Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the South Africa economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for South Africa through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The South Africa Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for South Africa and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on South Africa, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in South Africa over the next 5-years?

BMI's South Africa country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the South Africa Market - Political Strengths, Weaknesses, Opportunities and Threats facing South Africa.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for South Africa's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark South Africa's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for South Africa, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of South Africa's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

Key Sector Outlook

Which industry sectors in South Africa will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in South Africa's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express