South Africa’s present and future is inextricably linked to the fortunes of the continent and the rest of the world. Our crossroads is located within a global crossroads.

The world is in the midst of the worst economic crisis since the Great Depression. Revised IMF forecasts in March 2009 indicate that global growth this year is expected to be zero, down from its half-a-percent forecast barely a month before. According to IMF Managing Director, Dominique Strauss-Kahn, the IMF forecast for global growth to be released in April 2009 "will indeed reveal a negative global growth for the first time in 60 years". Speaking from Dar es Salaam on 9 March, Strauss-Kahn warned: "Even though the crisis has been slow in reaching Africa's shores, we all know that it's coming and its impact will be severe. millions will be thrown back into poverty". Sub-Saharan Africa has seen its best growth performance in 40 years, averaging over 5% per annum for the past five years. This growth rate is now expected to slow to 3%, with much of it driven by the few oil producing countries.2

While South Africa has been buttressed by strong financial regulations and prudent fiscal and monetary policies, the ripple effects of the global economic downturn are sending tremors through our economy. In the third quarter of 2008, although net new jobs were created, more than 74,000 jobs – primarily in the resources sector – were lost as the global demand for primary commodities contracted.3 The availability of capital financing has shrunk and the costs of borrowing have increased substantially. Emerging markets are feeling the impact as banks, burdened by bad debts, and foreign investors shy away from investment.

South Africa is also impacted by the instability of a failed neighbouring state, Zimbabwe. We are bearing the brunt of a large-scale migration of Zimbabwean citizens and the social, economic and political costs of Zimbabwe's chaos. The economic downturn in the rest of the region will also increase migration from other countries. The risk of sporadic violence against foreigners looms large as poor people carry the burden of the uncontrolled influx and the competition for scarce and diminishing resources spirals out of control.

The impact of climate change, coupled with the economic crisis, places increasing pressure on agricultural production, rural sustainability and food security.

The continuing inability to control crime and ensure citizen safety reduces South Africa's attraction as a favourable investment and tourist destination. As a country, we will have to make a concerted effort to attract international visitors to the 2010 FIFA World Cup, in addition to meeting our infrastructure targets, already strained by the lack of government capacity and increased capital costs.



Perspectives from members of the Dinokeng Scenario Team.

We need to see how the global economy responds to the current crisis. Where there is volatility in the pricing of primary commodities, how will the South African economy withstand this? The new centres of growth – India, China, Russia and Brazil – will impact on South Africa and we will see lower rates of growth over the next five years. We’ve seen the reduction of unemployment from 31% [in 2003] to 23% – any reversal would be dire.

A word of caution: there are constraints that we need to accept and live with. We cannot behave as if we are insulated and living on an island. We have a small and open economy. We are not a closed economy.

We need to work out our role vis a vis the region. Do we want to be the powerhouse or just another SADC country? What is our responsibility to the region? Take the xenophobia – do we have the capacity to process the nuance about what constitutes an economic versus a political refugee? Does Home Affairs know how to deal with this?