South Africa Prone to More Economic Instability

CEIC Macro Watch, November 29, 2013: A significant surge in capital flows to South Africa has been witnessed in the past two decades, especially after the post-apartheid market liberalisation. In 2012, the country recorded a financial account surplus of ZAR 162,430 million, compared to a deficit of ZAR 5,500 million in 1993. Portfolio investment in 2012 amounted to ZAR 94,655 million, representing 48% of total capital inflows, while foreign direct investment reached ZAR 37,540 million, accounting for 19% of the total. Excessive reliance on capital inflows in the form of portfolio investment, which tend to be volatile, may leave the country economically and financially unstable as the economy becomes more vulnerable to external shocks. This could partially explain the sluggish economic growth in South Africa during certain periods, in 1997-1998 for instance due to the Asian financial crisis, in 2000-2002 due to the Dotcom Crash and, lately, due to the 2008 crisis. The International Monetary Fund expects economic growth in South Africa to remain modest in 2013 and 2014. By Mai Thabet in Egypt - CEIC Analyst Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription. Back to Blog
2nd December 2013 South Africa Prone to More Economic Instability