1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

FOREWORD
The second publication of the Southern Africa Economic
Summit pre p a red by the Finance and Investment Sector
C o o rdinating Unit (FISCU) takes place in the context of
significant regional and international political and financial
d eve l o p m e n t s .Within SADC the political situation is stable
and there is close collaboration by member-states to ensure
that peace holds in A n gola and the Democratic Republic of
the Congo. M u l t i - p a rty democracy has become the norm in
all SADC economies and the robustness of these
democracies is attested by the procedural elections to be
held in at least four SADC countries in 1998 and 1999. M o s t
of the fo rthcoming elections will have international
o b s e rvers and the presence of independent electoral
commissions ensure that the process is proper and fair. I n
keeping with mature democracies it is expected that the
fo rthcoming elections will yield smooth succession and
government functions will not be disrupted in any way.
Significant economic policy changes within SADC have
o c c u rred over time as economies we re adjusting. T h o u g h
adjustments we re a result of diffe rent circumstances the
whole region is benefiting from the positive contagion effe c t .
Economic policy has become the focus of public debate as
m a c ro-economic management issues are discussed with a
wide range of re l evant stakeholders such as labor, c o m m e rc e
and industry, and non-government organizations. T h e
commitment of SADC governments to adhering to sound
economic principles can not be questioned. As SADC
economies continue to grow the debate is no longer on
what economic systems to adopt but the focus has shifted to
a point where the debate is on how to ensure that a marke t
based economic system embraces a wide majority in ord e r
to add ress pove rty and other social backlogs. It is a concern
of SADC citizens that the economic policy env i ronment is
c o n d u c t i ve to attracting and keeping domestic, regional and
fo reign inve s t o r s .
I n t e r n a t i o n a l ly the focus of multilateral deliberations have
been on the Asian financial crisis which have outperfo r m e d
p revious crises such as the Tu r key and Mexican crises of 1994
re s p e c t i ve ly.The consequences of the Asian crisis continue to
reverberate world-wide and the effect is transmitted in
d eveloped economies through diminished demand of dollarpriced
goods and serv i c e s , and through deleveraging in
financial marke t s .SADC economies have not been immu n e
to the crisis.Asian countries import base metals and minerals
and other raw materials from the southern Africa re g i o n .
Textiles and other labor intensive products from A s i a
compete with textiles and other products produced by the
re g i o n .It is thus expected that the effect of the crisis will be
felt in these sectors. In South A f r i c a ,owing to the emerging
m a r ket status accorded to the country, the impact felt in the
Emerging Market Index (EMI) was easily and immediately fe l t
in the first ro u n d .As a result of slower growth in Asia and its
impact on world grow t h ,SADC expects that the demand fo r
e x p o rted materials to decline and impact negative ly on
regional export s . Notwithstanding the pessimistic outlook
SADC economies are expected to grow faster than the re s t
of Africa and other developing economies for the ye a r
1998 / 1999 .It may be pre m a t u re to conclusive ly assess the
impact of the Asian crisis. H oweve r, c o m p a r a t i ve ly speaking,
the effect on SADC seems to be minimal because the
regional financial markets are not as globally integrated as
the financial markets in the rest of the wo r l d .
BONGI KUENE
D i rector (FISCU)
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