SOUTH Africa is not keeping pace with other emerging markets as an attractive destination for foreign investment, a survey of more than 12,000 business leaders from more than 40 economies showed on Thursday.
The latest Grant Thornton International Business Report showed 57% of international business leaders considering global expansion were looking at the five biggest emerging economies of China, India, Russia, Brazil and Mexico, compared with 38% looking at Western Europe, and 33% at North America.
Privately held businesses ranked the African continent at 13%, with South Africa achieving a 12% response as a potential investment destination for this year.
Although South Africa was a top investment "hotspot", it was not keeping up with other emerging markets as an attractive destination for foreign investment, said Jeanette Hern, partner and head of corporate finance at Grant Thornton Johannesburg.
"Potential investors from developed economies have highlighted South Africa as one of the top investment hotspots on the African continent when considering boosting their growth prospects through international expansion plans," she said.
The growth expansion rates forecast for South Africa are better than those forecast for Brazil, with a rate of 5.7% (up from 5%) expected for this year. But Ms Hern cautioned that new fears regarding rising prices and wage bills would fuel inflation in South Africa.
"Business sentiment at the start of 2013 has dwindled with anecdotal evidence of weaker order books. This is coupled with the ongoing labour instability, which is adding further unease to the South African economy," she said.
However, businesses in Brazil, Peru, and Mexico, as well as in South Africa, appear well placed for growth going forward, with strong order books and higher revenue expectations recorded in the survey.
Ed Nusbaum, Grant Thornton International’s global CEO, said growth rates in and around Europe looked set to disappoint for the next year.
South African business owners were recorded as being the most optimistic executives in the emerging economies sector when trends for the past 10 years were assessed.