South Africa’s present and future is inextricably linked to the fortunes of the continent and
the rest of the world. Our crossroads is located within a global crossroads.
The world is in the midst of the worst economic crisis since the Great Depression. Revised
IMF forecasts in March 2009 indicate that global growth this year is expected to be zero,
down from its half-a-percent forecast barely a month before. According to IMF Managing
Director, Dominique Strauss-Kahn, the IMF forecast for global growth to be released in
April 2009 "will indeed reveal a negative global growth for the first time in 60 years".
Speaking from Dar es Salaam on 9 March, Strauss-Kahn warned: "Even though the crisis
has been slow in reaching Africa's shores, we all know that it's coming and its impact will
be severe. millions will be thrown back into poverty". Sub-Saharan Africa has seen its best
growth performance in 40 years, averaging over 5% per annum for the past five years.
This growth rate is now expected to slow to 3%, with much of it driven by the few oil
While South Africa has been buttressed by strong financial regulations and prudent fiscal and
monetary policies, the ripple effects of the global economic downturn are sending tremors
through our economy. In the third quarter of 2008, although net new jobs were created,
more than 74,000 jobs – primarily in the resources sector – were lost as the global demand for primary commodities contracted.3 The availability of capital financing has shrunk and the
costs of borrowing have increased substantially. Emerging markets are feeling the impact
as banks, burdened by bad debts, and foreign investors shy away from investment.
South Africa is also impacted by the instability of a failed neighbouring state, Zimbabwe.
We are bearing the brunt of a large-scale migration of Zimbabwean citizens and the social,
economic and political costs of Zimbabwe's chaos. The economic downturn in the rest of
the region will also increase migration from other countries. The risk of sporadic violence
against foreigners looms large as poor people carry the burden of the uncontrolled influx
and the competition for scarce and diminishing resources spirals out of control.
The impact of climate change, coupled with the economic crisis, places increasing pressure
on agricultural production, rural sustainability and food security.
The continuing inability to control crime and ensure citizen safety reduces South Africa's
attraction as a favourable investment and tourist destination. As a country, we will have to
make a concerted effort to attract international visitors to the 2010 FIFA World Cup, in
addition to meeting our infrastructure targets, already strained by the lack of government
capacity and increased capital costs.
|VOICES OF DINOKENG
Perspectives from members of
the Dinokeng Scenario Team.
We need to see how the global
economy responds to the current
crisis. Where there is volatility
in the pricing of primary
commodities, how will the
South African economy withstand
this? The new centres of growth
India, China, Russia and
Brazil will impact on South
Africa and we will see lower rates
of growth over the next five years.
Weve seen the reduction of
unemployment from 31% [in
2003] to 23% any reversal
would be dire.
A word of caution: there are
constraints that we need to accept and live with. We cannot behave
as if we are insulated and living
on an island. We have a small
and open economy. We are not
a closed economy.
We need to work out our role
vis a vis the region. Do we want to
be the powerhouse or just another
SADC country? What is our
responsibility to the region? Take
the xenophobia do we have the
capacity to process the nuance
about what constitutes an
economic versus a political
refugee? Does Home Affairs
know how to deal with this?