South Africa Business Forecast Report Q4 2012

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook

Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Uncertainty Reigns Ahead Of Crucial ANC Vote
We hold to our view that President Jacob Zuma is most likely to be re-elected as president of the ruling African National Congress in
December, but we highlight that Deputy President Kgalema Motlanthe could emerge as a credible challenger over the coming months
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Political Trials And Tribulations Over The Coming Decade
There are many issues that threaten South Africa's political stability over the long term – not least, the inequalities still stemming from
the apartheid era and the foreign policy challenge that is Zimbabwe Although our core scenario envisages no major change to the
political backdrop, we present a number of alternative scenarios

Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Downside Risks For Growth
We hold to our view for the South African economy to undergo a slowdown in growth in 2012, forecasting that real GDP will expand by
2 7% following the 3 1% recorded for 2011 Although private consumption is likely to hold up relatively well, serious headwinds from the
global economy will inevitably take their toll on growth
TABLE: REAL GDP GROWTH
TABLE: ECONOMIC ACTIVITY
TABLE: MAJOR GOLD EXPANSION PROJECTS
Monetary Policy
Finely Balanced Risks For Monetary Policy
We forecast that the South African Reserve Bank will keep the repo rate on hold at 5 50% over the medium term Although inflation risks
cannot be ignored, the central bank will want to main an accommodative stance given the gloomy outlook for the global economy and
the eurozone in particular Rates may even be cut given the latter, but we expect the central bank to keep its ammunition in case the
eurozone descends even further into crisis
TABLE: MONETARY POLICY
Balance Of Payments
Current Account: Weak But Not A Major Risk
We forecast that South Africa's current account deficit will widen over the medium term, to 5 1% of GDP in 2012 and 5 4% in 2013, from
3 3% in 2011 However, foreign investment inflows are likely to be sustained, and this being the case, the current account deficit is not
likely to be a major concern for investors
TABLE: CURRENT ACCOUNT
Regional Economic Outlook
The SSA Landscape In 2021
Using our long-term economic and demographic projections, BMI has sketched an outline of how Sub-Saharan Africa (SSA)'s economic
landscape is likely to change over the next 10 years

Chapter 3: 10-Year Forecast
The South African Economy To 2021
Structural Constraints To Curb Long-Term Growth
While we forecast relatively stable real GDP growth rates over the coming 10 years, ongoing structural shortcomings will continue to
limit South Africa's long-term growth potential High unemployment and powerful trade unions present key challenges to the authorities
TABLE: LONG-TERM MACROECONOMIC FORECASTS

Chapter 4: Business Environment
SWOT Analysis
BMI Business Environment Risk Ratings
Business Environment Outlook
Institutions
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
TABLE: BMI LEGAL FRAMEWORK RATING
TABLE: LABOUR FORCE QUALITY
Infrastructure
TABLE: AFRICA – ANNUAL FDI INFLOWS
TABLE: TRADE AND INVESTMENT RATINGS
Market Orientation
TABLE: TOP EXPORT DESTINATIONS, 2002-2009
Operational Risk

Chapter 5: Key Sectors
Pharmaceuticals
TABLE: PHARMACEUTICAL SALES
TABLE: PRESCRIPTION DRUG SALES
TABLE: PATENTED DRUG SALES
TABLE: OTC MEDICINE SALES
TABLE: MEDICAL DEVICE SALES
TABLE: GENERIC DRUG SALES
Telecommunications
TABLE: INTERNET
TABLE: FIXED LINE
TABLE: MOBILE ARPU (ZAR)
Other Key Sectors
TABLE: AUTOS SECTOR KEY INDICATORS
TABLE: FOOD & DRINK SECTOR KEY INDICATORS
TABLE: INFRASTRUCTURE SECTOR KEY INDICATORS
TABLE: DEFENCE & SECURITY SECTOR KEY INDICATORS
TABLE: OIL & GAS SECTOR KEY INDICATORS
TABLE: FREIGHT KEY INDICATORS

Chapter 6: BMI Global Assumptions
Global Outlook
The Cycle Has Turned
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES REAL GDP GROWTH FORECAST
TABLE: REAL GDP GROWTH CONSENSUS FORECASTS
TABLE: EMERGING MARKETS REAL GDP GROWTH FORECAST 45