Dr. Iraj Abedian

In the past decade the South African economy has grown by an average of 2.6% compared with just 0.7% from 1982-93, a tremendous performance given the social demands placed on the new democracy.

'Winning the World Cup in 2010 is just the latest sign of this progress,' said Dr. Abedian, who dismissed AIDS as 'economically irrelevant' to economic growth, and judged crime and violence 'a far more important factor'.

His prediction is that GDP growth will range from 2.2% to 3.2% in the years from 2004-2008.

'Before 1994 we saw a decade of decline with an economy that we stuck in a debt trap and borrowing too much, foreign exchange was too low and so was direct investment,' he said. 'The situation is very different today.

'There have been major structural changes in the economy with less dependence on commodities. Automobile exports are now worth more to the economy than gold. The Mercedes C-Class is made in South Africa for export to Japan, for example, and next year all Toyota Corollas will be made in South Africa.

'Inflation is down to 1%, the lowest level since 1956. And the collection of taxes has been radically improved, allowing the Government to increase public spending without raising borrowing.

'Household debt is also at a very healthy 54% compared with 85% in Europe and 125% in the USA. That means if interest rates shoot up then South Africa will not feel the pressure so much as some countries.'

Dr. Abedian also highlighted the strength of capital markets in South Africa, which are unusually large for an emerging country and allow local companies to raise money cheaply in bond issues rather than borrowing abroad. Risk premiums on new Government bonds have also been very low, indicating confidence among investors.

However, Dr.Abedian argued that the recent strength of the Rand was 80% down to the weakness of the US dollar and only 20% due to internal factors such as 'interest rates which are still too high'. He thought US interest rates would rise after the November election and strengthen the US dollar.

'For the medium to long term South Africa has the best prospects since the 1950s,' concluded one of the country's top economists who also pointed to the importance of strong social institutions and unexpected political stability in delivering this performance.

Standard Bank established a UAE branch in 1998 specializing in gold, trade finance and energy funds. But from June last year has offered private and offshore banking, mainly aimed at South African expatriates.