South Africa's consumers have made significant improvements in the overall quality of their lives during the past decade. As duly noted by the International Monetary Fund (IMF) there has been real growth in disposable income. The IMF says, too, that the distribution of wealth in the country is increasingly including social groups that were previously disbarred from active participation in the economy.
When South Africa emerged in the 1990s from the political isolation triggered by apartheid and became a key part of the world economy GDP growth followed.
In its "Monetary Policy Review May 2005" the South African Reserve Bank (SARB) says that real GDP growth will be 4.1 percent in 2005 and 3.8 percent in 2006. The SARB cited a March Reuters survey of 13 economists as the source for the data for this prediction.
In addition, the SARB said that domestic demand was the main factor in growth for 2005. The rationale here was given as "near record high" consumer confidence recorded by the First National Bank and South Africa's Bureau of Economic Research (BER) in their regular consumer surveys for the first quarter 2005.
The SARB reiterated the fact that consumer confidence "increased across all population and income groups."
Reasons for the high level of consumer confidence were low interest rates (the lowest in two decades), low inflation, increasing house prices, favorable personal tax rates, increased social grants, and a moderate increase in employment.
Business Day (Johannesburg) took issue with this last point in a May 24, 2005 story that complained about a serious "unemployment crisis" in the country. The newspaper cited a recent Statistics South Africa estimate of extraordinarily high unemployment at 26.9 percent. The CIA's World Factbook provides a similar 2004 estimate of 26.2 percent.
Nonetheless, it does appear that South Africa's economy is strong and growing. In a March 2005 econometric exercise, the IMF concluded that South Africa's consumer fueled economy positively affects the entire continent "with a 1 percentage point increase in South African growth being associated with a 0.5 to 0.75 percentage point increase in the rest of Africa's growth."
A HIGH RATE OF UNEMPLOYMENT
CONTINUES TO BE A SERIOUS PROBLEM