The Economy

As has been the case since the end of apartheid, the country’s current growth rate of 1.9 percent has remained lower than that of most developing countries, including the BRIC nations (Brazil, Russia, India, China), of which South Africa is now a member. After the global recession, South Africa’s growth rate reached 3.2 percent before slowing to 1.5 percent in 2014. The fall in global commodity prices since 2011 has certainly been a contributor, as have been continued infrastructure issues related to power generation and distribution and the railways. In April 2016, the government lowered the predicted growth rate for 2017 from 2.6 percent to 0.8

percent. 15

The monetary policies that the government has adopted have had mixed results. By 2008, before Zuma became president, the inflation rate had hit an all-time high of 9.35 percent. The next few years saw a significant decrease—to as low as 3.37 percent in 2010. Yet that rate had risen to 7 percent in February 2016, the highest since 2009, due in part to drought-induced rising food prices and the depreciation of the rand (30 percent against the US dollar). 16

Meanwhile, the fiscal deficit dropped from 3.85 percent in 2009 to 2.9 percent in 2011, only to increase to 4.07 percent in 2014.17 Looking ahead, the government projects a 3.2 percent deficit in fiscal year 2017-2018.

In addition, government debt in the period since 2009 has mushroomed—from a record low of 28.3 percent of GDP in 2007 to a record high of 50.1 percent in 2015. 18 The combination of the bigger deficit and greater debt, along with sluggish growth and the president’s decision in December 2016 to sack the finance minister (only to name three different finance ministers in one week), has put the country’s credit rating at risk. Standard and Poor’s and Fitch have now downgraded South Africa’s sovereign rating to one level above speculative grade, making it increasingly difficult for the finance minister to cover debt at reasonable interest



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