South Africa punching below its weight despite available opportunities – Frost & Sullivan

20th April 2017 By: Megan van Wyngaardt - Creamer Media Contributing Editor Online

Despite the political turmoil and fiscal downgrades facing the country, South Africa’s economy is set to grow by 0.8% this year, research firm Frost & Sullivan said on Thursday.

In a webinar on its Global Economic Outlook 2017, Frost & Sullivan senior economist Craig Parker noted that economic growth would be supported by higher global demand for the country’s minerals and lower inflation.

“However, there are significant risks to the country’s growth outlook. The outlook remains at 0.8%, unless significant currency depreciation and rising inflation leads to further muted growth,” he noted.

While discussing the outlook for emerging markets, Frost & Sullivan global president and managing partner Aroop Zutshi highlighted that South Africa fell under the markets that still had tremendous opportunity for growth.

He noted that, with strong 'hard' and 'soft' infrastructure, mature markets for capital investment, continuing foreign direct investment and a strong technology sector, South Africa was a frontrunner in the emerging markets sector.

On its emerging markets parameters index, South Africa scored moderately in terms of its growth and innovation but, ironically, scored high in the research firm’s leadership parameters.

Meanwhile, in his outlook for the continent, Parker pointed out that inflation, heightened political turmoil and weaker demand would continue to slow growth in the major economies.

He added that exchange rate risks and shortage of foreign exchange would also be a significant obstacle for Africa in the year ahead, exacerbated by lower commodity prices and high current account deficits.

Parker further noted that the year ahead would hold brighter prospects for Tanzania, Ghana and Kenya, which would see broadly stable gross domestic product growth.