There has been a clear shift in the engine of growth of the world economy and the balance of economic power is being gradually altered.

• In terms of South Africa’s external trade performance, regional trading patterns altered during 2009.  China has become the country’s leading export destination, with mining and mineral products, as well as iron and steel making up most of South Africa’s export basket to the Asian giant.
   
• The changing pattern of trade poses a mixed bag of implications for South Africa. Since China is a large consumer of South African minerals such as iron ore, chrome and manganese, as well as certain primary beneficiated products like iron and steel, and a variety of chemicals, producers of such goods are likely to witness increased demand for their products. However, businesses that rely on the US, Japan and Europe as export markets could find trading conditions still rather challenging in 2010. The visibly changing balance of economic power globally calls for a serious re-consideration of key focus areas in future, since many emerging economies are competing within a similar space.
   
• The economic recovery is not yet on a sound footing across the globe.  Although many emerging and developing economies have seen a return to higher growth, some advanced economies are struggling to emerge from the recession.
   
• The growth momentum of advanced economies has slowed down considerably over time. Average economic growth in the US during the last decade was the lowest since the 1930s.  Emerging and developing economies have become key drivers of global economic activity, with countries such as China, India and Brazil playing a prominent role.  China has not only become the world’s second largest economy in purchasing power parity terms, but is probably the number one exporter as well.
   
• The sluggish and possibly protracted recovery in advanced economies will keep competitive forces extremely strong. It is therefore imperative that South Africa’s private and public sectors, as well as the country’s labour force, take serious steps to improve efficiencies and productivity, embark on a skills development drive and improve the domestic business environment from the operational and investment attractiveness standpoints, in order to ensure gains in global competitiveness, secure traditional markets and penetrate new ones

• The outlook for the global economy is improving gradually, with more encouraging signs in support of a recovery. A rebound in global trade flows, a surge in global manufacturing, buoyant equity markets and marginal improvements on the consumer front reflect the more optimistic sentiment. However, the pace of recovery remains largely reliant on continued public sector intervention, which is increasingly constrained by fiscal and borrowing limitations. Also, most of the regulatory deficiencies and structural imbalances that led to the financial crisis remain largely unresolved, posing a threat on future stability.
   
• In South Africa, the surprisingly strong growth in real GDP during the final quarter of 2009 was due mainly to a solid performance by the manufacturing sector.  Strong growth was also reported by the mining and construction sectors, whilst government continued to stimulate growth too. 
   
• The recovery in the manufacturing sector, which is the domestic economy’s second largest, continued in January 2010, but is still concentrated in a few sub-sectors.  The broad transport equipment sub-sector reported a strong recovery more recently.  However, despite the encouraging developments, its production volumes are still around 25% lower than the peak level achieved in 2008.
   
• Strong cash-flow management will be critical for the survival of many companies.  With households still under serious pressure and the prospects for spending activity remaining rather unsatisfactory over the short-term, business enterprises focusing on consumer-related articles or services may continue finding it difficult to raise turnover levels, whether domestically or externally.
   
• Local business and consumer sentiment rebounded strongly in the opening months of 2010.  An improvement was visible across all broad business segments, especially new vehicle dealers, as well as all income groups covered by the consumer survey.