South Africa is a middle-income developing country with an abundant supply of natural resources; well-developed financial, legal, communications, energy and transport sectors; a modern infrastructure, and a stock exchange which ranks among the ten largest in the world. At the same time, the challenges which the country faces are to create a strong and balanced economy in order to eliminate poverty, develop a dynamic human resource capacity, facilitate the creation of a prosperous southern African region and engage the world economy in a sustainable manner.
In the context of the internationalization of production processes and the integration of commodity, financial and technological markets into a single market, South Africa, like other developing countries, is highly susceptible to trends in the economies of its major trading partners.
The defining feature of 1998 was the havoc wreaked in the global economy by the onset and subsequent spreading of the East Asian financial crisis. South Africa was partially protected from the worst of the crisis. This was primarily due to a stable macroeconomic environment and the soundness of the domestic financial system. However, there were some negative consequences from the Asian crisis – the most important being that the economy was diverted from its growth trajectory for the year.