Economical History (Macroeconomics) of South Africa Essay

Economical History (Macroeconomics) of South Africa - Essay Example Though the country is not well endowed with good farming land, it exports products like sugar cane, wheat and corn. Farmers also raise sheep, cattle and pigs for food and other products (Ross, 2008). Until the world financial that affected the country in 2008, the country economic progress has been stable and remarkable. For example from the graph, south Africa GDP rose by 3.7% in 2002. This has been attributed to the conducive environment which prevailed due to continuous economic growth. The economy has been improving since the adoption of democracy (Feinstein, 2005). In 2003, the GDP increased to 4.9%. This was due to macroeconomics reforms that were initiated by the government. These reforms boosted competitiveness thus enhancing the development of the economy. The implementation of these reforms created job opportunities in the country thus opening South Africa to the international markets (Feinstein, 2005). Deterioration in the country economy, has led to budget imbalance in South Africa. The situation has been improving, and in 2005, the deficits dropped dramatically to 0.5% of the total GDP. This can linked to the government policies to reduce taxes, cut tariffs and curbing inflation. All these measures allowed a relaxed exchange control in the country (Feinstein, 2005). This has led to the development of a rock solid macroeconomic framework that has seen the decline in the budgets deficits to its lowest in 2005. GDP declined in 2008, thus causing economic recession in the whole country. The main cause of this was the global economic crisis that affected the country. The crisis had a tremendous effect on the international market. South Africa export decreased as the global market deteriorated due to this crisis (Ross, 2008).As a result; this led to rapid decline in the country’s GDP. Exchange rate mostly affects the economy of a given country by changing the price of exchanging with other