SA could score on soccer until 20132010-02-04 The World Cup has the potential to boost tourism for three years after the event, according to Goolam Ballim, Standard Bank's chief economist. He said at a presentation yesterday that the real benefit to South Africa was that it could push the contribution of the tourism sector to 10 percent of gross domestic product (GDP), from 8 percent currently and only 4 percent a decade ago. He said the direct impact of the high-profile sporting event would be to add between 0.4 percentage points and 0.6 percentage points to GDP this year. GDP at current prices was running at about R2.4 trillion last year. Ballim said South Africa's economic recovery would be export-led, as local demand remained weak. A strong recovery in China and India, which between them now buy about one-third of local exports, up from only 10 percent a decade go, would boost demand for local output. Commodity prices could also be expected to rise. He said China would grow about 10 percent this year and India 8 percent. Advanced economies were also recovering, though global growth would remain "tepid" this year. But Ballim said there were signs those countries were no longer dependent on the fiscal and monetary stimulus measures that sparked the recovery. This implies growth is more likely to be sustained when the stimulus measures are withdrawn. Ballim said any recovery in local consumer spending would be "creditless or credit-lite", and funded mainly from household income. Income gains would be "modest". Recent Reserve Bank figures showed credit to households grew only 2.14 percent year on year in December. In the first half of last year household income contracted by 6 percent in real terms, compared with the same period in 2008, due to a combination of job losses and high inflation, Ballim said. The improvement in income this year would be due to lower inflation but also to some recovery in employment in the second half of the year, he said. The only source of economic growth apart from trade would be government spending on consumption, which would grow 4 percent, said Ballim. He forecast GDP would grow 2.6 percent this year, after contracting 1.8 percent last year. Razia Khan of Standard Chartered also predicted modest growth. But she expects credit growth to return. "With banks seemingly comfortable again with secured lending, it should only be a matter of time before the other components of private-sector credit start to rise again," she said. By Ethel Hazelhurst
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SA could score on soccer until 2013
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