Journal Issue


International Monetary Fund. External Relations Dept.
Published Date:
April 2008
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South Africa is seeing its longest expansion, thanks in part to sound policies. But inflation has risen, power supply constrains growth, a widening current account deficit raises vulnerability, and unemployment remains high.

Strong domestic demand has helped spur growth in the past few years …

(annual percent change)

But that strong demand, along with rising global food and fuel prices, has increased inflation, prompting the central bank to raise interest rates …


So far, the current account deficit has been more than offset by capital inflows, but reliance on portfolio flows increases vulnerability in today’s global environment.

(billion dollars)

… contributing to a steady reduction in public debt and the first fiscal surplus in decades.

(percent of GDP)

… and it has fueled a widening current account deficit, which has reflected falling national savings and rising investment.

(percent of GDP)

A main challenge is lowering unemployment, still high despite vigorous job growth.

(millions of persons)
Sources: South African Reserve Bank; Statistics South Africa; and IMF staff estimates.1 Estimate.2 Consumer price index excluding mortgage interest (targeted by Reserve Bank).3 Through third quarter.

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