Document: South Africa: Focus on Savings, Investment, and Inclusive Growth

The World Bank Office in South Africa is pleased to launch a new, biannual series of economic reports—the South Africa Economic Update. This first issue is anchored in the national aspirations of faster and more  inclusive growth, with special emphasis on the issues of savings and investment.

By way of background, this genre of economic reports constitutes an important aspect of the World Bank’s analytical program in a number of middle income client countries, including Brazil, Russia, India, and China— the alliance that South Africa has recently joined, collectively now referred to as BRICS. In keeping with the established tradition, the South Africa Economic Update comprises two sections. The first section summarizes the recent economic developments, juxtaposing both global and country-level trends. The second section takes a deeper analytical look at a topic of special interest and high relevance to the country.

In the aftermath of the worst financial crisis since the Great Depression that left no country untouched, economic recovery in South African is gathering strength, with economic growth expected to pick up to 3.5 percent in 2011. The policy emphasis now shifts back to the longer term structural issues. For South Africa, this entails raising the level of growth and making it more inclusive. The modest performance on savings and investment certainly is not consistent with the government’s objective of attaining 6–7 percent GDP growth. This is clearly brought out by the experience of successful countries that have maintained high rates of growth over sustained periods and backed by influential studies in the economics literature. The crucial challenges associated with lifting the savings and investment rates are covered with analytical depth in this inaugural issue.