Given the expected growth in the short term

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is anticipated in the next two to five years. Given the expected growth in the short term, international trade is anticipated to show positive, albeit modest expansion. An increase in international growth holds promise for South Africa’s strong export sector in terms of improved business opportunities, but it will remain a very competitive environment.UnemploymentAlthough unemployment is declining in the major industrialised countries due to positive real growth, it is still considered to be at unacceptable levels in most. In the US, unemployment is at just more than 6.5%, in the UK at just more than 7%, in the European Union at 12% with some countries like Spain and Greece at levels of more than 25%, while China and Japan have unemployment rates of approximately 4%. The focus of the authorities in these countries remains to support growth in an effort to cut unemployment levels further or prevent them from rising from current levels in the case of China.InflationInflation remains under control in all the major industrialised countries as well as in China. Over the next two years, inflation will remain at levels of approximately 2% in most of these countries. Currently fears exist that the European Union could even experience some deflation in coming months and even years.Interest ratesGiven the outlook for modest real growth as well as inflation remaining under control in most of the major industrialised countries and in China, indications are that short-term interest rates will remain stable at current low levels up until at least the end of 2014. Forecasts indicate that US long-term interest rates will rise modestly in the following two years and will influence the trend of long-term interest rates in the other countries as well.Commodity marketsAlthough commodity markets benefit from forecasted global growth, China remains one of the most significant influencers due to the
3SECTION 1: THE BIG PICTUREsheer magnitude of its commodity demand and imports. Moderated growth in China and a drive from Chinese authorities to redirect consumption expenditure domestically could taper imports. The boom period evidenced from 2003 to 2008 is something of the past and competition in commodity markets will intensify. Logistics plays a major role in giving countries the competitive edge in these markets.EnergyThe cost of energy plays the greatest role in transportation costs. Recent political unrest in the Middle East, North Africa and now the Ukraine and Russia spurs price volatility for oil and natural gas. Nonetheless, forecasts indicate that the growth in the supply of energy in the next few years – oil, natural gas, coal, nuclear, wind, solar and biofuels – will be stronger than the growth in the demand for energy. Therefore the dollar cost of energy is expected to decline in the following five years. In a country like South Africa, however, the cost of energy will also be dependent on the value of the currency. If the rand weakens more than the dollar cost of energy, it will still have a negative impact on the costs to be

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