SOUTH Africa still has hurdles to overcome to end its economic isolation despite President Bush's decision to repeal the Comprehensive Anti-Apartheid Act (CAAA).They include US legislation still in place and many sanctions against Pretoria remaining at the state and city level. The real significance will flow from the powerful symbolic message it has sent to other nations, including Japan, which has been waiting for the US to take the lead over this emotional issue. Chris Stals, the governor of the South African Bank, was cautious in his welcome of the lifting of sanctions. He said it would not result in large sums of money pouring into the country because loans from the International Monetary Fund (IMF) and certain investments and trade covered by other legislation were still banned. South African black liberation movements, churches, and human rights groups, however, reacted bitterly to the news. Cyril Ramaphosa, secretary general of the African National Congress, criticized the move as premature, citing the violence in black townships and the many political prisoners still in jail. "The violence has resulted in a situation where there is no climate for free political activity. Furthermore, large numbers of persons, defined as political prisoners in terms of the agreement reached between the ANC and the South African government, remain in jail," he said. Other nations have signaled plans to ease pressure on Pretoria. This was evident in reports from Tokyo that Japan would lift its remaining sanctions by July's end. "The psychological impact worldwide is very important, and it will open doors in the Far East, which has been inhibited by the maintenance of US sanctions," said Foreign Affairs Minister Roelof Botha. In theory, South African air links can now be restored with the US, but some South African Airways executives are privately concerned that individual states may refuse the airline landing rights. Wayne Mitchel, executive director of the US Chamber of Commerce in Johannesburg, says there are 26 states and 76 major cities in the US which still have their own sets of sanctions that need to be removed before they can forge any new contacts with South Africa. Although lifting sanctions will ease the country's access to international loans, South Africa is still barred from receiving IMF financing and Export Import Bank trade assistance. In addition, a number of large private institutions, including pension funds, have bans on South African investment, which may remain in place. There is also no little likelihood of the Commonwealth countries lifting sanctions before their October conference in Zimbabwe. Nevertheless, there is some hope in the long term for South African exports, which took a battering under sanctions. For example, trade between the US and South Africa fell from $5 billion in 1984 to $3 billion in 1989. HILARY FRIEDMAN, a senior economist with the Standard Bank in Johannesburg, said South Africa could get some "export-led growth" but doubted whether it would get very much immediately. One reason for this, Mrs. Friedman says, was that when the US market for steel was closed, South Africa had turned to the Far East and Eastern Europe. Unless the steel industry here has excess capacity, she added, it could not be expected to abandon these markets. There were also "protective tendencies in the US that are not very easy to track" and that meant South Africa might not to be welcomed back with open arms. She said far more important than sanctions was the continued ban on IMF funds. Since the debt crisis of 1985, when major private banks decided against providing any substantial new long-term loans, South Africa has been starved of foreign finance. Friedman said these same banks would want the "IMF stamp of approval" as a sign that South Africa was once again a good credit risk. One reason South Africa had become a "very good credit risk," was because of disciplines sanctions had placed on the economy. As a result, the ratio of total foreign debt to GDP had fallen from 40 percent in 1985 to 19 percent in 1990. But Mr. Botha said that trade sanctions had deeply cut into the country's growth rate with more than 270 American companies disinvesting after CAAA's implementation in 1986. He warned that unless the violence stopped there would be no dramatic boost in foreign investment.