The main challenge facing policymakers in the short term (2011-12) will be to expedite the country's recovery from its first recession since 1992 by maintaining stimulus measures (including a budget deficit and cheap money), while guarding against macroeconomic imbalances. The main test in the medium term (2013-15) will be to overcome the structural barriers (such as skills shortages) that are preventing South Africa from entering a phase of faster, more labour-intensive growth. However, the policymaking environment will become more cluttered during the forecast period following the creation of two new policymaking centres, the National Planning Commission and the Department for Economic Development, to add to the Treasury, the South African Reserve Bank (SARB, the central bank) and the Department of Trade and Industry. Although new initiatives are needed, especially to deal with deep-rooted problems such as high unemployment, stark inequality, skills shortages, crime and AIDS, there is a risk of conflict and inertia in the absence of decisive leadership. The expected completion of major infrastructure projects will facilitate business activity, but there will be new challenges in the form of stricter anti-competition laws and steep rises in electricity tariffs.

There are unlikely to be any major policy shifts in 2011-15, as key moderates are likely to remain in powerful positions. The influence of the left wing will increase, but the Economist Intelligence Unit expects the centrist view to prevail, especially in light of the country's reliance on foreign capital. As a result, inflation-targeting will remain in place and fiscal policy will be prudent, although there is a risk that in-fighting between the centre and the left will impede policymaking and implementation. Policy towards private enterprise will remain accommodating, but parastatals will continue to play a key role. Privatisation opportunities will be limited and public-private partnerships will continue to confront regulatory hurdles. There is a risk of increased state intervention, such as the formation of a new mining parastatal. An official commitment to tackling high levels of crime and AIDS is welcome, but land reform will need to be handled very carefully to avoid damaging agriculture and scaring investors. Black economic empowerment will remain a key objective, but there will be a drift towards broad-based deals that spread the benefits more widely.