South Africa's tourist attractions are now even more affordable

Here's why South Africa tops the list for budget-savvy travellers

South Africa is a standout among its global peers offering an unexpected advantage: affordability. That’s according to brokerage RMB Morgan Stanley.

The rand has weakened about 9% versus the dollar and euro, and some 12% against the British pound, over the last year. The depreciation, along with fairly subdued inflation in South Africa compared with abroad, means that relative prices for local goods and services on sale are cheaper than elsewhere.

“Consumers can drink nearly three cappuccinos in South Africa for the price of one in the US and could spend four nights in a Cape Town hotel for the price of only one in London,” said Mary Curtis, a strategist at the broker, and Andrea Masia, an economist.

“Looking at the bigger picture, low relative prices of South African goods and services are just another example of value in South Africa assets,” they wrote in a note to clients.

Valuations for both bonds and equities look cheap compared with peers, with elections due later in the year potentially providing a fresh catalyst to unlock some value, they said.

Meanwhile, price disparities support the continued recovery in South Africa’s net tourist receipts, while the weaker currency should result in lower import growth, they said. Both would help offset the slide in export prices and limit the potential deterioration in the current account.