Chapter 10: Balance of payments, 1970-2000
15580_DeclineSAfrica/Chap10 31/5/02 12:58 pm Page 1 10. Balance of payments, 1970-1999 Philip Mohr 10.1 INTRODUCTION The 1950s and, in particular, the 1960s were decades of stable economic growth in South Africa, despite periodic political turbulence. Average annual economic growth rates of 4.7 per cent (1950s) and 5.5 per cent (1960s) were recorded, along with average annual inflation rates of 3.7 per cent (1950s) and 2.4 per cent (1960s). Exchange rates were stable, gold output increased and the gold price was fixed. During the last three decades of the twentieth century all this changed. Average annual economic growth fell to 3.3% in the 1970s, 2.2 per cent in the 1980s and 1 per cent in the 1990s. Average annual inflation rose to 9.7 per cent in the 1970s and 14.6 per cent in the 1980s before declining to 9.8 per cent in the 1990s. Exchange rates were volatile, gold output fell and the gold price became an important source of instability. Above all, the balance of payments became a major determinant of the pace of economic activity and the direction of economic policy in South Africa. This chapter reviews some of the important developments in the South African balance of payments from 1970 to 1999. Section 10.2 provides an overview of the current and capital account balances during this period and identifies some of the main subperiods during the three decades in question. Section 10.3 deals briefly with the openness of the South African economy. Sections 10.4 and 10.5...
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