By staff at IQ Option Magazine.
The South African market is one of the major emerging markets in the African region with only two more participants – Morocco and Egypt. Drained by the apartheid policies in the mid-20th century, the government managed to restore trade relations under the presidency of Nelson Mandela. However, this was not the end of all woes for the country as it entered recession for the first time since 2009.With the flow of money out of developing markets into the US economy, the dollar saw a huge rise and the South African rand fell to its lowest level since 2016. With the negative effect spreading, trade, manufacturing and agriculture in South Africa all recorded declines. All these signs strongly hint towards the need for a positive rate of growth to keep the economy balanced.
Current scenario
The economic growth of the nation has been significantly low in the last few years. This has resulted in a loss of trade, mass unemployment and serious structural obstacles. With the recent change of president after Jacob Zuma’s removal from office, the new leader has pledged to attract foreign trade and investment. The main hurdle that lies in the way of securing investment is the uncertainty over regulations in the economy, that disturbs both investors and traders alike.
Owing to the weak rate of growth, the central bank finds itself unable to cut down the rate of interest, especially when there is such unrest in other emerging markets. In an interview with the Financial Times,the governor of the South African Reserve Bank, Lesetja Kganyago, said: “There is not much monetary policy space. Our monetary policy stance as it stands now is accommodative.” Thus, the financial decision-makers find themselves in a difficult position and feel that there is no way a change in the monetary policy could help the economy.
Current challenges
Though the financial and international trade issues pose serious threats, they do not form the core of the problems that are bringing down the rate of development in the economy. Other factors that degrade the standard of living in the country are also contributors to the diminishing development rate. The country is characterised by rampant community crime and high rates of HIV infection. These factors make educated people of different ethnicities leave the country if they find an opportunity.
Trade in the country also poses a challenge. Though the trade margins are dwindling, the new president, Cyril Ramaphosa, has made efforts to offer new and meaningful investment and trade opportunities throughout the country. He aims to strengthen bilateral relations and cooperation on the global scale to uplift the nation and boost growth. Forex trading in the country has also gained popularity and offers quick returns unlike stock and bonds trading. (To know more about the current trading conditions in South Africa, visit http://www.tradeforexinsa.co.za/.)
The bottom line is that the major concern of the government should be enhancing the growth rather than amending the bank policies. If the South African government under the new head can find a solution to key financial and quality of life issues, the economy will still have the ability to get promoted to a developed market from an emerging one. The natural resources that dazzled the colonists, the soil, minerals and ports are still intact and hold much potential to boost the growth of the economy.
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The South African market is one of the major emerging markets in the African region with only two more participants – Morocco and Egypt. Drained by the apartheid policies in the mid-20th century, the government managed to restore trade relations under the presidency of Nelson Mandela. However, this was not the end of all woes for the country as it entered recession for the first time since 2009.
With the flow of money out of developing markets into the US economy, the dollar saw a huge rise and the South African rand fell to its lowest level since 2016. With the negative effect spreading, trade, manufacturing and agriculture in South Africa all recorded declines. All these signs strongly hint towards the need for a positive rate of growth to keep the economy balanced.
Current scenario
The economic growth of the nation has been significantly low in the last few years. This has resulted in a loss of trade, mass unemployment and serious structural obstacles. With the recent change of president after Jacob Zuma’s removal from office, the new leader has pledged to attract foreign trade and investment. The main hurdle that lies in the way of securing investment is the uncertainty over regulations in the economy, that disturbs both investors and traders alike.
Owing to the weak rate of growth, the central bank finds itself unable to cut down the rate of interest, especially when there is such unrest in other emerging markets. In an interview with the Financial Times, the governor of the South African Reserve Bank, Lesetja Kganyago, said: “There is not much monetary policy space. Our monetary policy stance as it stands now is accommodative.” Thus, the financial decision-makers find themselves in a difficult position and feel that there is no way a change in the monetary policy could help the economy.
Current challenges
Though the financial and international trade issues pose serious threats, they do not form the core of the problems that are bringing down the rate of development in the economy. Other factors that degrade the standard of living in the country are also contributors to the diminishing development rate. The country is characterised by rampant community crime and high rates of HIV infection. These factors make educated people of different ethnicities leave the country if they find an opportunity.
Trade in the country also poses a challenge. Though the trade margins are dwindling, the new president, Cyril Ramaphosa, has made efforts to offer new and meaningful investment and trade opportunities throughout the country. He aims to strengthen bilateral relations and cooperation on the global scale to uplift the nation and boost growth. Forex trading in the country has also gained popularity and offers quick returns unlike stock and bonds trading. (To know more about the current trading conditions in South Africa, visit http://www.tradeforexinsa.co.za/.)
The bottom line is that the major concern of the government should be enhancing the growth rather than amending the bank policies. If the South African government under the new head can find a solution to key financial and quality of life issues, the economy will still have the ability to get promoted to a developed market from an emerging one. The natural resources that dazzled the colonists, the soil, minerals and ports are still intact and hold much potential to boost the growth of the economy.
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