South Africa has the biggest economy in Africa, being a head in mineral production, industrial output and contributing the largest proportion of electricity in Africa. The country has well developed legal, financial, energy systems, as well as vast amounts of natural resources. According to Andrew Roux, South Africa is a mid-income country, although it exhibits some indicators of a developed economy such as the non-reliance on agriculture (Roux A., 2005, pg 44). Based on the 2009 estimates by OECD Economic Surveys, South Africa has a GDP purchasing ability of US$488.6 billion. The country has a per capita income of US$10,000 and is ranked 26th globally based on GDP (OECD Economic Surveys, 2010, pg 34).
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South Africa's financial systems are robust and sophisticated. The banking systems are amongst the best in the world, and are rated among the top ten in the global front. The country is not only an emerging economy, but also a gateway to the vast African market. South Africa plays an important role in providing communications, transport, relief and energy to the continent (Economic watch, 2011).
Prior to the global economic crisis in 2008, South Africa enjoyed unprecedented and steady economic growth. According to South Africa info, the GDP rose by 5.1% in 2007, 5.4% in 2006, 5.0% in 2005, 4.9% in 2004, 3.1% in 2003, 3.7% in 2002 and 3%.1 in 2001. From the third quarter of 2001 to the second quarter of 2008, South Africa enjoyed 32 quarters of uninterrupted economic growth. But the global crisis finally plundered the country's economy into recession in 2008. The negative economic growth continued in to the first and second quarters of 2009, recording GDP of -5.8% and 3.1% respectively (South Africa Info, 2011).
Sound fiscal management and economic growth have seen the country's budged deficit drop from 3.2% of GDP in the financial year 2000/2001 to 0.4 in the 2005/2006. In 2006/2007, the economy of South Africa realized a 0.3% budget surplus for the first time in the economic history of the country. From the year 2004 through to the year 2006, South Africa enjoyed a relatively constant consumer inflation of 5%, although the global economic crisis pushed it up to 6.6% in 2008. Credit ratings for South Africa have steadily improved since 2001, finally achieving upgrades from Moody's and Fitch in 2005. The agency cited South Africa's improved economic status, moderate burden form debts and less vulnerability from external fluctuations.
Another important feature of the South African economy is the labor division. The country's labor pool can be divided into two: formal and informal. The formal labor is concentrated in the service sector while the informal labor divisions are concentrated in the unorganized sector of the economy (Jones S, 2002, pg 66). According to the 2006 estimates, South Africa's GDP amounted to about $ 576.4 billion with the service sector contributing the largest share (South Africa info, 2011).
The currency unit of South Africa is the Rand, symbolized as R, which gets divided in to one hundred cents. Rand notes are in R10, R20, R50, R100 and R200. Denominations in coins include c1, c2, c5, c10, c20, c50, R1, R2 and R5. The South African Rand has remained relatively constant in relation to the US dollar. The exchange rate as at 2011-04-09 is R6.6 for US$1. Majority of the South African population lives in big cities such as Port Elizabeth, Johannesburg, Cape Town and Durban. These cities are the principle sources of trade and drivers of the South African economy. A good proportion of the population lives in rural villages while small groups of indigenous tribes still live in the forest regions.