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South Africa - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Pretoria
Area:: 1.219 km2
Total Population:: 52.275
Annual growth rate:: 1.00%
Density:: 43.00/km2
Urban population:: 62%
Population of Johannesburg (10.268), Cape Town (7.280), Durban (3.468), Pretoria (2.346), Port Elizabeth (1.245), Soweto (923), Vereeniging (774)
Official language: Afrikaans, English, Ndebele, Northern Sotho, Sotho, Swati, Tsonga, Tswana, Venda, Xhosa, Zulu.
Other languages spoken: Fanagalo, Hindi, Sotho, Tsotsitaal, Venda,
Business language: English and Afrikaans.
Ethnic Origins:: Black African 79.6%, White (Italians, Germans, English...) 9.1%, Colored 8.9%, Indian/Asian 2.5%.
For more information, visit Statistics South Africa.
Beliefs: Almost 80% of the population follows Christianity. Small segment of the society follows Hinduism, Islam, Judaism and traditional African beliefs.
Telephone codes:
To make a call from: 0
To make a call to: +27
Internet suffix:: .za
Type of State::
South Africa is a federal republic state based on parliamentary democracy.
Type of economy::
Upper-middle-income economy, Emerging Financial Market
The wealthiest country in Africa (GDP); the world's leading producer of gold.

Economic overview

South Africa is the economic giant of the African continent, contributing nearly 40% to the total African GDP. In the secondary sector, 75% of the biggest African companies are South African. The recovery after the severe international economic crisis was negatively affacted by the euro-zone crisis because the eurozone countries are the destination of a third of South-African exports. Growth was only 1.9% in 2013 and was driven by the car industry but hindered by structural problems (electricity supply, logistics), by industrial strikes which had a negative impact on production and by the fire in a steel factory. A recovery is expected in 2014 (2.9% of growth) following the recovery of the global economy.

The year 2013 was marked by the death of the South-African hero Nelson Mandela, whose fight against the apartheid has left behind a significant legacy in terms of democracy and social cohesion. Throughout the years, social conflicts and strikes continued, especially in the automobile sector, which affected the country's economic performance and business climate. In Johannesburg, demonstrators demanded better public services and a better wealth redistribution. The government is planning to launch a national plan to fight poverty and create 11 million new jobs by 2030. Refusing austerity measures, the government relies on the policy of large-scale state funded works which should stimulate employment: 50 billion euro will be needed to renovate water supply infrastructures and the company Alstom has won a contract worth 4.5 billion euro to renovate a fleet of suburban trains. The country wants to give priority to renewable energies and is trying to explore its shale gas potential.

Parliamentary election should take place in May while the current president Jacob Zuma has been the target of increasing criticism. The country has to deal with a number of obstacles: it loses 3 billion euro annually due to corruption; the cost of living has been rising (predicted to rise by 6% in 2014); the country's dependency on export commodities makes the economy very vulnerable to market fluctuations; the agricultural reform is still to be implemented.

Unemployment affects nearly a third of the country's active population and one in two young people. A five-year plan was announced in December 2011 to tackle the scourge of AIDS (affecting nearly 12% of the population), which represents another obstacle to the overall economic development of the country. One third of the population is still living below the poverty line. South Africa is the most unequal country in the world, the black majority being largely left behind.

Main industries

South Africa has a subsoil rich in mineral resources. It is the world's largest producer and exporter of gold, platinum and chrome and the 4th largest producer of diamonds. The country produces 80% of the world's platinum and also has 60% of the world's coal reserves.The country has diverse manufacturing industries and is a world leader in several specialized sectors, including railway rolling stock, synthetic fuels, mining equipment and machinery. The industrial sector employs a fourth of the workforce and represents over 30% of the GDP.

The services sector is flourishing. It employs almost 70% of the workforce and represents more than two thirds of the GDP. Tourism should continue to grow after the stimulus it has received from the World Football Cup. South Africa has a sophisticated financial structure with an active stock exchange that ranks among the world's top 20 in terms of market capitalization.

Agriculture only represents a small part of the GDP (2.4%) and employs only 5% of the country's workforce. South Africa is the 6th largest producer of wine in the world.

Foreign trade overview

South Africa is very open to international trade. The share of international trade in the country's GNP exceeds 60% (2010-12 average).The three top trade partners of South Africa are: the United States, Japan, and the European Union. The country exports essentially metals and precious minerals and imports machines and equipment, chemical and oil products and food products.

Since the beginning of the world economic crisis, the country's exports have remained weak, while imports has been steadily increasing, leaving the trade balance in growing deficit. In 2013, imports rose more quickly than exports, deepening the decific, which increased from nearly 35 billion R in 2012 to nearly 70 billion R in 2013.

FDI

Being largely a free-market economy, South Africa encourages foreign investment in both private and public sectors. Factors attracting FDI into the country include: transparent regulatory framework, large population, access to raw materials and political stability. According to the UNCTAD World Investment Report, the potential appeal for foreign investment in South Africa is strong compared with other countries in the world, but performances are poor in terms of FDI attraction. Since the global financial crisis of 2008-2009, which lead to a decline in FDI, investment flows recovered, rising from 37.5 billion R in 2012 to 79.1 billion R in 2013. In Africa, the country is second only to Nigeria and Mozambique in terms of FDI inflows. Globally, South Africa also ranks 15th among the most attractive economies for transnational companies for 2013-2014. In addition to structural issues in the electricity supply sector and logistics sector, industrial strikes, which regularly affect production, can also prove discouraging to investors. 
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