Stable economic performance

South Africa is a middle-income emerging market with abundant natural resources, well-developed financial, legal, communication, energy and transport sectors, a stock exchange ranked among the top 20 in the world, and a modern infrastructure supporting the Southern African region.

Economic growth has been steady and real gross domestic product (GDP) rose by 5.4% in 2006, the highest since 1980, and 5.1% in 2007. In the fourth quarter of 2007, South Africa recorded its 33’rd quarter of uninterrupted expansion in real GDP since September 1999, the longest in the country’s history.

GDP growth in South Africa

(Data source: Statistics South Africa)

Economic growth and prudent fiscal management have seen South Africa's budget deficit (the difference between the government's total expenditure and its total receipts, excluding borrowing) decrease from 5.1% of GDP in 1993/94 to 0.5% in 2005/06, the second-lowest fiscal deficit in the country's history after the 0.1% reached during the gold boom in 1980. In 2006/07, the country posted its first ever budget surplus, of 0.3%.

Despite lower taxes across the board, the upbeat economy, improved tax compliance and a steadily improving tax and customs administration have seen government revenue surging, hitting R475.8-billion in 2006/07 - over three times the figure for 1996/97.

Tax revenue in South Africa

(Data source: National Treasury)

In 2006 the World Bank ranked South Africa 29'th for ease of doing business, the highest score in Africa and ahead of similar emerging markets such as India, Russia, the Czech Republic, Mexico, China and Brazil.

London's Economist Intelligence Unit ranked South Africa 10th out of 31 countries for business cost-effectiveness.

In 2005 the value of South African companies' mergers and acquisitions increased to 63%, R269 billion, up from R165 billion in 2004, according to Ernst & Young. Some R57-billion of this was inward investment, and equal to the total foreign direct investment (FDI) in the country over the previous five years. Making South Africa's FDI overtaking India for the first time ever.

South Africa's real interest rate has stabilised and the currency remains at competitive levels. Consumer inflation averaged 4.6% in 2006, compared to 9.8% in 1994.

South Africa's inflation rate (CPIX)

(Data source: Statistics South Africa)

According to the World Wealth Report by Merrill Lynch, the number of South African dollar millionaires increased by nearly 16% in 2005, putting it in the top three countries with the fastest-growing population of the super-rich in the world.