strains ontheeconomy. 96.Withalready inadequate reserves ofgoldandforeign exchange andwitha substantial outflow ofcapital, SouthAfricareliesheavily onthesurplUS accruing onitsexternal merchandise tradetomeetitsforeign debtrepayments. In1988, thisorucial surplus wasreduced severely asanincreased volumeofimports was absorbed byanexpanding economy. SouthAfrica's exports alsoincreased in1988as oompared with1987,butatalowerratethanimports. Reflecting theworsening balance-of-payments situation, foreign reserves decreased byover$800million in 1988. ~IThereduction inthetradesurplus inthefaceofSouthAfrica's substantial debt-servicing obligations ledtotheenactment ofdeflationary measures intheMarch1989budget, bywayofinoreased indireot taxes. The immediate debt-related financial pressures werealleviated somewhat under agreements reached between SouthAfricaandinternational banksl,nlate1988and early1989. 97.In1988,itbecameevident thatSouthAfricaoannotinitspresent circumstances af!ordamodest3.2peroentgrowthrate.Yetithasbeenestimated thata 5peroentrealgrowthrateisnecessary ifSouthAfrioaistoaccommodate newentrants tothelabourmarketanddealwiththegrowing unemployment, in particular amongblacks.lilWithout fundamental internal political change, and thereby changed economic relations withtherestoftheworld,theoutlook for SouthAfricain1989andsubsequent yeersisbleak. 98.Adisquieting development wastheincrease intradein1988between South Africaandmanyofitstrading partners, including somemajorones.While transnational corporations continued towithdraw fromSouthAfrica, fewerdidsoin 1988thanin1987.Moreover, manywithdrawing corporations maintain avariety of non-equity linkswithSouthAfricathatarepotentially profitable tothe corporations andvaluable toSouthAfricaforthedevelopment ofitsindustries. 99.Thepresent reviewnotesBomeareasinwhichSouthAfrica's already fragile economy wouldbeparticularly vulnerable toincreased economic pressures. B.Economic performance 100.TheSouthAfrican economy grewinrealtermsby3.2percentin1988,the biggest increase since1984andsurpassing therateofgrowthofthe population. ~IInthefirsthalfof1988,growthwasdrivenbyasteeprisdin "grossdomestic expenditure. Inthethirdquarter oftheyear,growthwasfueledby asubstantial riseinnon-gold exports. Theannouncement inlateSoptember 1908of a15percentpayincrease forSouthAfrica's publicservants, effective from -25--1January 1989,contributed toayear-end revival ingrossdomestic expenditure. Theincrease waspartlypolitically motivated, sincethecivilservice isthe backbone oftherulingNational ~ty.Fortheyear1988asawhole,gross domestic expenditure roseby7p~.cent. ~/ 101.Although therateofinflation inSouthAfricadecelerated iu1988forthe secondconsecutive year,consumer pricesona~erage werecloseto13percent higherin1988thanin1987.Theexchange valueoftherandagainst other c~rrencies weakened cOAsiderably in1988.Against theUnitedStatesdollar, the randfellby30percentbetween year-end 1987andJune1989. ~/ 102.Theratioofpersonal savings topersonal disposable incomeslumped toa recordlowofaround1.0percentinthecourseof1988,reflecting continued economic andpolitical uncertainties onthepartofSouthAfricans. Grossdomestic inveatment inthefirstthreequarters of1988,measured inconstant prices, was about7percentaheadoftheprevious ninemonths. However, depreciation of existing capital stockcontinued tosqueeze thelevelofnetnewinvestment to ratherlowlevels. ~I 103.Theprolonged stagnation oftheSouthAfrican economy, thefailure ofthe economy togrowfasterthanthepopulation andthedecline incapital investment as 8proportion ofgrossdomestic product (GDP)areevident inthestaggering proportion oftheeconomically activepopulation thatisunemployed. Estimates of thecurrent rateofunemployment inSouthAfrica fromofficial sources andfrom independent res9archers varywidely. Therestrictive criteria usedbytheCentral Statistical Services indefining "unemployed" andtheexclusion ofthe"independent homelands" (Transkei, Bophuthatswana, VendaandCiskei) fromcoverage reaultina lowend-of-the-scale estimate ofabout1.4million. According tostatistics and definitions oftheCentralStatistical Services, inSeptember 1987,ofthe economically activepopulation theunemployment ratewas17.9percentfor Africans, 11.9percentforAsians and14.0percentforColoureds. However,
**Analysis**
The text primarily discusses the economic situation of South Africa, including its balance of payments, foreign reserves, debt, trade, and employment. It also touches on the country's economic growth rate, inflation, and investment. The text does not mention natural resources, environment, agriculture, forestry, fishing, health, education, humanitarian aid, culture, or science and technology.

**Category**
Economic development, Employment