Can South Africa's GDP break through 5%?

China and India are the world's largest developing economies. For some time now, these giants have been achieved economic growth in excess of 7% per annum. China's GDP recently surged through the 10% mark. South Africa, on the other hand, has long struggl

Many argue that South Africa's growth figures are seriously understated. However, in the absence of contrary statistics, we have to accept that local GDP growth is pegged at just less than 5% per annum - and that the current level is likely to prevail.

The Bureau for Economic Research (BER) at the University of Stellenbosch believes that South Africa's resilient consumer sector, fierce fixed investment environment and growth in exports will prop up GDP growth in the coming years. The BER estimates GDP growth of 4.8% in 2007. They conclude that: "A number of risks remain - global economic imbalances, the oil market, domestic balance of payments concerns, etc. - which could still lead to more trying growth conditions. Suffice it to say that the imminence of these risks has softened in the BER's view."

Risks aside, local GDP should also be boosted by the coming 2010 Soccer World Cup. Suggestions that FIFA is preparing alternate sites for the competition have been refuted, and it appears construction on local 2010 stadiums is progressing well.

Soccer World Cup remains a major driver

It's not only the analysts at the BER who have been extremely busy in the last few months. Another recent survey by Grant Thornton's tourism, hospitality and leisure consulting division re-states the benefit that will flow South Africa's way in the lead up to the world cup. Initial estimates have been revised upward by some R21 billion. Analysts now believe that the country's GDP will be boosted by some R51.5 billion between now and 2010.

The major contributors to this total will be tourism and direct expenditure. The tourism sector will account for some R15 billion of the total. Meanwhile, huge government expenditure on transport and stadium infrastructure will contribute a staggering R30.4 billion.

There have been some suggestions that the South African tourism industry is ill prepared for the expected surge in business. This follows suggestions that the majority of tourists do business online - and that the websites of the majority of local tourism companies are simply unable to cope. Hopefully tourists are more interested in getting to South Africa to experience the World Cup. Concerns over the ease of online bookings are secondary when your team is participating in a huge competition on an international stage.

The less said about Zimbabwe

The prospect of higher economic growth on the back of the World Cup and consumption expenditure is dampened slightly by the sinister threat posed by one of our northern neighbours. It seems government's quiet diplomacy stance on Zimbabwe has crept into the country's economic forecasting too. There appears to be little concern from analysts about the impact that the ailing Zimbabwean economy could have on the southern African region. Each year that Zimbabwe is allowed to flounder will probably lessen the impact of a crash on the South African economy.

Of more concern is the social impact of the resultant human migration. Estimates already put the number of illegal Zimbabwean immigrants in South Africa at the 3.5 million mark. A full blown economic crisis in Zimbabwe could see this number swell significantly. Yet, in his latest comment on the matter, President Thabo Mbeki suggests we should simply accept the situation and learn to live with these immigrants. Mbeki said that South Africa would not be building a 'Great Wall of China' to keep people from crossing its borders.

This is noble sentiment indeed - but what Mbeki is forgetting is these illegal immigrants are quickly being assimilated by South African society. Since obtaining a South African identity document has been downgraded to a purely commercial transaction, it is not long before these aliens become fully fledged citizens. And a South African citizen enjoys certain rights, including those to housing, water and electricity. The true risk of an open border policy is the impact on government's ability to provide the services it promises the citizens of the country.

Editor's thoughts:
South Africa is a beautiful country with loads of potential. We are surprised that the government is not keen to take the necessary steps to protect the values and freedoms it has worked so hard to create. Do you believe we should patrol and protect our borders to keep illegal immigrants from simply walking into the country? Send your comments to gareth@fanews.co.za.