Analyses of Emerging Country: Africa

Topics: Macroeconomics, Economics, International trade Pages: 20 (6712 words) Published: March 10, 2013
International Trade Final Report | Analysis of Emerging country: South Africa|
Elizaveta TemnikovaJekaterina ScerbakovaDaniel GustavssonBBA-3|

Executive Summary
In the following pages we will analyze the place of South Africa in International Trade. In order to do so we will analyze the background of the country, develop PESTLE analysis, look at the balance of payments as well as trade balance, examine exchange trade policy and growth rate of the economy. In conclusion we will provide forecast for country’s development.

Today South Africa's trade and industrial policy is moving away from a highly protected, inward looking economy towards an internationally competitive economy, capitalizing on its competitive and comparative advantages. From the period of apartheid, it has made great progress in dismantling its old economic system, which was based on import substitution, high tariffs and subsidies, anticompetitive behavior, and extensive government intervention in the economy. The leadership has moved to reduce the government's role in the economy and to promote private sector investment and competition. It has significantly reduced tariffs and exports subsidies, loosened exchange controls, cut the secondary tax on corporate dividends, and improved enforcement of intellectual property laws. The macro-economic policy includes 5 macro objectives:

* Economic growth
* Increasing employment
* A positive trade balance (increasing exports above imports) * Combating inflation
* Equity
The achievement of these objectives is very much important to the South African economy, the effects of the failure to achieve these objectives will lead to social, politically and economically instabilities. Over the past years the South African government and the reserve bank SARB have managed to achieve the five macro objectives effectively thus why it is ranked among the fast developing nations. South Africa is the largest economy in the African continent. South African economy is projected to grow over the next decade at around 4%. Based on these projections, South Africa’s is supposed to add approximately 0,7% of global demand in the next 10 years. South Africa is an attractive economy with various prospects in the future, however it is far from being a member of BRIC group. The main concerns are the development of its current account and the difficulties in demographic and labor market situation. Therefore, the process of including South Africa in the BRIC must focus on the geopolitical rather than on economic reasons.

Table of contents

Executive Summary2
List of illustrations4
Country background and Importance of South Africa5
PESTLE analysis6
Political Environment6
Economic Environment7
Social Environment8
Technological Environment9
Legal Environment9
Environmental Area9
Macro-economic policy10
Economic growth10
Increasing employment12
Trade balance12
Balance of payments14
Exchange rate policy17
Appendix 120

List of illustrations

Fig. 1. South Africa GDP Growth Rate10
Fig.2. South Africa Balance of trade11
Fig.3. Trade Balance12
Fig.4. Exports and Imports data12
Fig.5. Balance of payments14
Fig.6. Exports and Imports at current prices15
Fig.7. Balance of payments: transfers and balance on current account15
Fig. 8. Economic forecast19

The purpose of this project is to analyze the place of South Africa in International Trade. In order to do so we analyzed the background of the country, developed PESTLE analysis, looked at the balance of payments as well as trade balance, examined exchange trade policy and growth rate of the economy. In conclusion we provided the possible forecast for country’s development. Country background and Importance of South Africa

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