Cape Town economy

Posted On Tuesday, 04 September 2001 03:01 Published by
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GLOBALLY, the international trade in goods and services has rapidly grown as a share of world output.

GLOBALLY, the international trade in goods and services has rapidly grown as a share of world
output. Nationally, the economy has shifted its focus from an inward, domestic orientation towards
an external, global orientation. Since the mid-1990's, Cape Town's economy has especially been
affected by the growing global importance of international tourism and investment.
Sectors experiencing the highest long-term growth since 1980 are manufacturing, trade and catering
(which includes tourism) and finance and real estate.
Sectors experiencing relatively slower growth since 1980 include services (social and government
services have been reduced largely due to public sector restructuring) and construction.
Since 1980, Cape Town's economic growth or real GGP has grown at substantially higher rates than
the national average. The higher economic growth of Cape Town vis-á-vis the rest of the country is
due largely to the competitive advantages its sectors and industries have over those in the rest of
the country, particularly in certain manufacturing sub-sectors such as electronic and electrical
products, metal, steel and beverages.
For 1999 and 2000, however, Cape Town's real growth (at 1% and 2.1% respectively) appears to have
fallen behind national real economic growth (of 2.1% and 2.5% respectively).
The reasons for the 1999-2000 cyclical dip in Cape Town's growth relative to the national growth
rate, can be attributed to the relatively slower local growth of several large sectors, notably
manufacturing, finance and real estate, agriculture, transport and communications.
The Asian crisis in 1998 triggered a massive withdrawal of short term capital from South Africa
and Cape Town in particular, and the external demand (both international and nationally) for
locally produced manufactured goods, transport equipment and agricultural produce, partly due to
the rise in South Africa's interest rates.
New trade reform policies also impacted negatively on globally non-competitive local businesses
via lower import tariffs.
Then there were problems peculiar to the local agricultural sector, including adverse climatic
conditions, rising fuel and capital costs and a proliferation of private export marketing agents.
This was compounded by an over-supply of white wine, apples, citrus and other fruit on world
Most crucially, there was a slow-down in the growth of foreign tourist arrivals.

Publisher: Cape Business News
Source: Cape Business News

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