SA has enjoyed a higher growth rate than the global average for the past few years.
Growth moved onto a higher plateau of about 3% in 1999, dipped below that in early 2001 and then moved back up in the first half of last year. In subsequent quarters, however, it has waned somewhat, falling to 1,5% in the first quarter this year.
But it has still outpaced the rate of expansion in many parts of the world.
Much of the economic momentum that built up in the past decade has come from exports as SA shed the pariah status of the apartheid era. Last year exports contributed a third of SA's growth performance.
But an appreciation of more than 50% in the currency off its late-2001 lows has taken the wind out of the sails of exporters.
Another blow is that world growth this year is likely to be weak and the one region that promised to offer good trade opportunities, China, has been hit by the outbreak of Sars.
That means economic growth will have to come from inside the country this year and is highly unlikely to meet government's ambitious forecast of 3,5%. Most economists have reduced their forecasts for gross domestic product to 3% or less during 2003, with the stronger rand already beginning to dent the trade account.
Latest SA Revenue Service figures show that the cumulative trade surplus to March was nearly half the previous year's level. Exports fell 7% during the period.
Standard Bank group economist Iraj Abedian says: "An important economic manifestation is that the composition of exports has changed. A third of our exports are minerals but the rest is a mix. Diversification is a significant development."
He adds that in the short term SA has the buffer of its trade agreements with the US, the Africa Growth & Opportunity Act, and the European Trade Agreement.
Abedian says the economy has arrived at a new dispensation where "it is no longer true that the rand will depreciate by 10%/year". That may take the shine off exports, he says, but it will put the emphasis on the domestic economy. "Those companies that neglected the domestic economy because of their international strategy will have to rethink their strategy. A lot of new thinking is going to take place, which is a healthy development." He considers 3% growth this year still "doable".
The services sector is also likely to be a source of growth , with tourism booming. Its contribution to overall growth is up from 61,3% in 1995 to 63,5% last year.
