South Africa Infrastructure Report Q2 2013

BMI View: World Cup excesses, heavy bureaucracy and continuing political wrangles have weighed heavyon South Africa's previous glories. Last quarter we highlighted factors indicating a tentative change andthat view is now playing out. 2012 real growth data came in as expected on 2.5%, lending credence to ourlonger term outlook. However, much is left to be done to lift South Africa's struggling and debt-riddenconstruction sector out of its quagmire. Despite a slow return to positive territory, with a real constructionindustry growth of 2.9% forecast for 2013, the risks are still plentiful: policy uncertainty, cumbersomebureaucracy, intense credit rating pressure and violent clashes in relation to several strikes at mines acrossthe country.

Though South Africa's construction industry appears to be bottoming out and is now seeing a slow return togrowth, it is important to note that South Africa is still lagging behind many of its neighbours; who are allregistering a strong average growth of 6% for the same time period.