South Africa became part of the BRICS group back in twenty ten and its clear to see why. From two thousand and two through to two thousand and eight, the country experienced annual growth averaging a tad under five percent per year and at times during that period it had teased the eight percent level giving a glimpse of the possibilities ahead. With vast natural resources such as gold, diamonds and platinum, excellent infrastructure and easy access to finance for business it had all the right ingredients in place for this trend to continue. The global recession hit hard however and, after a sharp contraction in the economy of six percent, it never really found its feet again. An increasingly corrupt government and high crime rates haven’t helped win foreign investment back into the region and South Africa’s currency, the rand, has lost fifty percent of its value against the dollar in the last five years. Nearly a third of that loss has been in the past year alone. Just like it famous cured meat called Biltong – that’s got to be tough to swallow.
Today the economy is a shadow of its former self. Roughly a quarter of the population is unemployed, commodity prices have slumped and major exports such as iron ore and platinum are tumbling. The country is also in the grip of an energy crisis. State-owned Eskom, the utility company which generates around ninety five percent of the country’s energy is suffering from years of underinvestment. The result is rolling blackouts across the country to manage demand and this has had a major impact in the South Africa’s economic recovery. Mounting debt and a poor economic outlook have led to the major credit ratings agencies suggesting a downgrade of their credit status to junk in their next review. A move which will put the final nail in the coffin of a possible South African recovery and leave their Rugby team as the only thing worth keeping an eye on for the foreseeable future.
Today the economy is a shadow of its former self. Roughly a quarter of the population is unemployed, commodity prices have slumped and major exports such as iron ore and platinum are tumbling. The country is also in the grip of an energy crisis. State-owned Eskom, the utility company which generates around ninety five percent of the country’s energy is suffering from years of underinvestment. The result is rolling blackouts across the country to manage demand and this has had a major impact in the South Africa’s economic recovery. Mounting debt and a poor economic outlook have led to the major credit ratings agencies suggesting a downgrade of their credit status to junk in their next review. A move which will put the final nail in the coffin of a possible South African recovery and leave their Rugby team as the only thing worth keeping an eye on for the foreseeable future.
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