South Africa International Finance Country Report Leann Bustamante Miriam McDonough Lindsay Surig.
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Transcript of South Africa International Finance Country Report Leann Bustamante Miriam McDonough Lindsay Surig.
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South AfricaInternational FinanceCountry Report
Leann Bustamante
Miriam McDonough
Lindsay Surig
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Brief Description of South Africa Republic of South Africa Size: Less than 2x Texas Capital: Cape Town Population: 43, 647, 658: Growth
rate- .02% Ethnic Groups: black (75,2%), white
(13.6%), colored (8.6%), Indian (2.6%).
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Brief Description of South Africa The Boers: Dutch Settlers The Boer War: (1899- 1902) 1990s- End of Apartheid
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General Economic Importance Middle income, developing country Well-diversified economy
Natural Resources Financial, Legal, Communication, Energy and
Transport, Mining sectors Stock Exchange: ranked among 10 largest in the
world
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General Economic Importance Economic Problems
Unemployment rate Problems with respect to Apartheid Era Crime and Corruption HIV/AIDS
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General Economic Importance Imports/Exports
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Recent Economic History External Accounts
1998- 1.6% 1999- virtual balance
• 1998- Measures to reduce unemployment• 2000- Free Trade Agreement with EU• 2001- South African Development Community (SADC) trade
protocol• 2000- President MBEKI vow to promote economic growth
and foreign investment• 2001- Government slow down (result of international
economy)
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2001 GDP Figures GDP - $412 billion GDP growth rate – 2.6% GDP composition by sector
agriculture –3% industry- 31% services-66%
Inflation Rate- 5.8%
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Political Stability and Structure Apartheid Democracy Reformed structure 2002 Organization for African Unity African Union AU focus
Changed from fight against poverty and human rights To promote democracy, good governance, and economic
growth
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Assistance AU and President Thabo Mbeki continue to
seek assistance to implement their ideas “Future assistance will be focused on countries
that demonstrate a political and financial commitment to good governance and the rule of law, investing in their people, and pursuing policies that spur economic growth and alleviate poverty implementation. We will not work with governments which disregard the dignity and interests of their people.”
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Stability Increasing levels of stability The political structure seems strong enough
to hold the diverse region together. There are huge expectations for the new
South Africa.
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Major Exports 32.3 billion dollars in exports Export commodities: gold, diamonds,
platinum, metals, minerals, machinery, and equiptment
Export partners: EU with 33%, United States with 20%, Japan with 6%, and Mozambique with 2.5%
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Major Imports 28.1 billion dollars in imports Larger exporters than importers
Expected of a growth country
Imports include machinery, rice, equipment, chemicals, petroleum products, and scientific instruments
Major importing partners:EU with 41%, United States with 11.4%, Saudi Arabia with 7.3%, and Japan with 7%
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Currency Rand Over 10 years had devalued by 2/3 2001 fell 25% against the dollar, yen, and
the pound Favorite object for speculators
Underrated by 15% - 20%
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Exchange rates Rand per US dollar from 1997-Jan2002
11.58786 (January 2002), 8.60918 (2001), 6.93983 (2000), 6.10948, (1999), 5.52828 (1998), 4.60796 (1997).
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Trade Relationship withthe United States
South African shipments are entitled to specialized treatments under: Generalized System of Preferences African Growth and Opportunity Act
United States shipment are entitled to Most Favored Nation Status
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Trade Relationship withthe United States 1994: U.S.-South Africa Binational
Commission
2002: U.S.-South African Cooperative Forum
Between 1996 and 1999, foreign investment has increased significantly
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Other Major Trading Partners South African Customs Union
Botswana, Lesotho, Namibia, and Swaziland
Free Trade Agreement European Union
South African Development Community Free Trade Agreement Fourteen countries in the region
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South African Trade by Country(Rand ‘000)
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Investment Potential Positives:
Offers a market with a steadily growing economy Provides easy access to the other markets in
Africa Labor costs that are low Well developed financial institutions and capital
market Strong macroeconomic policies
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Investment Potential Negatives
Unemployment and crime rates are high
Education and health care systems are extremely poor
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Investment Potential South African Government has conducted a
number of investment promotion efforts
Attractive investment destination for capital goods, technology, foreign investment, and joint ventures
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South Africa
Questions or Comments?