South Africa is still in the midst of a clingy recession. But ultimately, its economy and related ETFs could recover to the point where they’re forces to be reckoned with.
South Africa’s GDP has contracted an annualized 3% from the from the first quarter, while growth dropped 6.4%, which officially made this the country’s first recession in 17 years, writes Robb M. Stewart for The Wall Street Journal.
President Jacob Zuma vowed to create 500,000 jobs this year and fight poverty. This statement comes after mining companies and manufacturers cut thousands of jobs and spending. In July, jobless rates inched up to 23.6% in the second quarter as 267,000 became unemployed and 302,000 gave up on looking for work.
Consumer price inflation dropped to 6.7% from 6.9% last month, but still remains above the Central Bank’s target range, reports Robb M. Stewart for The Wall Street Journal. The Reserve Bank reduced its repurchase rate 0.50%, to 7% earlier this month and has a target inflation rate of 3% to 6%.
According to iStockAnalyst, South Africa will eventually pull through to become “one of the big five emerging markets.” Why?
- South Africa has a stable political climate and financial sector
- The government is putting $98 billion in infrastructure
- Increases in the country’s product-based economy
- The country remains a big transport center for the majority of the world’s oil
- South Africa is one of the last to be affected by the global downturn, which means a recovery is only beginning
- iShares MSCI South Africa Index (NYSEARCA:EZA): up 39.8% year-to-date
Max Chen contributed to this article.