EIU country update

2001 is expected to be an important year for South African President Thabo Mbeki as he seeks to encourage economic growth and improve social delivery, the Economist Intelligence Unit (EIU) said in its latest country update on Wednesday.

“A shift in economic policy will target the less privileged members of society by boosting growth and promoting both domestic and foreign investment. Real GDP (gross domestic product) in 2001-02 is expected to continue to rise, but will not be enough to alleviate the country’s huge unemployment problem,” warned the EIU.

It added that the foreign policy of the ruling ANC in 2001-02 will be dominated by concerns in the Mbeki administration that the political situation in Zimbabwe will have an adverse effect on the entire region. “The Zimbabwe crisis is unlikely to die away in the next 12-18 months and will continue to have economic repercussions for the South African rand and trade. South Africa’s foreign policy will also focus on developing a fairly high profile in international forums such as the UN, the IMF, the World Bank and the World Trade Organisation,” said the EIU.

The unit added that official data suggested a recovery in the domestic economy and business confidence, which had been adversely affected by the collapse in the value of the rand.