The World Cup takes place this month in South Africa. It’s the world’s largest sporting event, so it’s no small thing to say that this will put ETFs that include exposure to the country in focus.
The World Cup kicks off on June 11 and lasts for a month, putting the eyes of the world on South Africa and its economy. Is the country ready for a closer look?
- The International Monetary Fund raised its growth forecast for South Africa to 2.6% this year, from a previous 1.7%, thanks to global trade rebounding and a stronger currency.
- Nasreen Seria for BusinessWeek reports that the rand’s surge to a 20-month high against the dollar earlier this month has also weakened export growth.
- Nasreen Seria and Franz Wild for BusinessWeek report that the inflation is still inside the central bank’s 3% -6% target range. South Africa’s inflation rate fell in March to 5.1%, its lowest in almost four years.
- While South Africa’s purchasing managers’ index fell to its lowest level since November, it’s still above 50, indicating that factory production is still expanding. Production has expanded for seven consecutive months now, reports Franz Wild for BusinessWeek.
One challenge faced by the country may continue to be consumers. Borrowing in South Africa has been down since the global recession took hold, and it’s been slow to make a recovery, Nasreen Seria for BusinessWeek reports. South Africa’s consumers are still under financial strain, with a nearly 25% unemployment rate and rising debt levels.
If the influx of tourists in the coming weeks lives up to the hype, perhaps they can make up for the weakness in South Africa’s own citizenry.
- iShares MSCI South Africa Index Fund (NYSEARCA:EZA)
Tisha Guerrero contributed to this article.