The economy of South Africa

The economy of South Africa is the second largest in Africa, after Nigeria

Historical statistics 1980-2017

YearGDP
(in Bil. US$ PPP)
GDP per capita
(in US$PPP)
GDP growth
(real)
Inflation rate
(in Percent)
Unemployment 
(in Percent)
Government debt
(in % of GDP)
1980134.74,631Increase6.6 %Negative increase14.2 %9.2 %n/a
1981Increase155.1Increase5,200Increase5.4 %Negative increase15.3 %Negative increase9.8 %n/a
1982Increase164.1Increase5,362Decrease−0.4 %Negative increase14.4 %Negative increase10.8 %n/a
1983Increase167.5Decrease5,331Decrease−1.8 %Negative increase12.5 %Negative increase12.5 %n/a
1984Increase182.2Increase5,658Increase5.1 %Negative increase11.3 %Negative increase13,7 %n/a
1985Increase185.8Decrease5,634Decrease−1.2 %Negative increase16.4 %Negative increase15.5 %n/a
1986Increase189.6Decrease5,620Steady0.0 %Negative increase18.4 %Negative increase16.0 %n/a
1987Increase198.5Increase5,760Increase2.1 %Negative increase16.2 %Negative increase16.6 %n/a
1988Increase214.1Increase6,081Increase4.2 %Negative increase12.9 %Negative increase17.2 %n/a
1989Increase227.7Increase6,331Increase2.4 %Negative increase14.8 %Negative increase17.8 %n/a
1990Increase235.4Increase6,398Decrease−0.3 %Negative increase14.2 %Negative increase18.8 %n/a
1991Increase240.8Decrease6,388Decrease−1.0 %Negative increase15.2 %Negative increase20.2 %n/a
1992Increase241.0Decrease6,234Decrease−2.1 %Negative increase14.1 %Negative increase21.2 %n/a
1993Increase249.8Increase6,306Increase1.3 %Negative increase9.7 %Negative increase22.2 %n/a
1994Increase263.3Increase6,492Increase3.2 %Negative increase8.8 %Negative increase22.9 %n/a
1995Increase277.2Increase6,690Increase3.1 %Negative increase8.8 %Positive decrease16.5 %n/a
1996Increase294.3Increase6,973Increase4.3 %Negative increase7.4 %Negative increase20.3 %n/a
1997Increase307.2Increase7,157Increase2.6 %Negative increase8.6 %Negative increase22.0 %n/a
1998Increase312.1Increase7,161Increase0.5 %Negative increase7.0 %Negative increase26.1 %n/a
1999Increase324.4Increase7,335Increase2.4 %Negative increase5.1 %Positive decrease23.3 %n/a
2000Increase345.8Increase7,701Increase4.2 %Negative increase5.4 %Positive decrease23.0 %42.2 %
2001Increase363.2Increase7,968Increase2.7 %Negative increase5.6 %Negative increase26.0 %Negative increase42.4 %
2002Increase382.4Increase8,327Increase3.7 %Negative increase9.1 %Negative increase27.8 %Positive decrease35.5 %
2003Increase401.5Increase8,642Increase2.9 %Negative increase5.9 %Positive decrease27.7 %Positive decrease35.4 %
2004Increase431.4Increase9,174Increase4.6 %Increase1.4 %Positive decrease25.2 %Positive decrease34.4 %
2005Increase468.7Increase9,847Increase5.3 %Increase3.4 %Positive decrease24.7 %Positive decrease33.2 %
2006Increase510.2Increase10,584Increase5.6 %Increase4.6 %Positive decrease23.6 %Positive decrease31.3 %
2007Increase551.9Increase11,302Increase5.4 %Negative increase5.4 %Positive decrease23.0 %Positive decrease27.1 %
2008Increase580.7Increase11,735Increase3,2 %Negative increase11.0 %Positive decrease22.5 %Positive decrease26.5 %
2009Decrease576.1Decrease11,486Decrease−1.5 %Negative increase7.1 %Negative increase23.6 %Negative increase30.1 %
2010Increase600.8Increase11,816Increase3.0 %Increase4.3 %Negative increase24.9 %Negative increase34.7 %
2011Increase633.4Increase12,281Increase3.3 %Increase5.0 %Positive decrease24.8 %Negative increase38.2 %
2012Increase659.3Increase12,600Increase2.3 %Negative increase5.6 %Negative increase24.9 %Negative increase41.0 %
2013Increase686.6Increase12,930Increase2.5 %Negative increase5.8 %Positive decrease24.7 %Negative increase44.1 %
2014Increase711.8Increase13,204Increase1.8 %Negative increase6.1 %Negative increase25.1 %Negative increase46.7 %
2015Increase728.8Increase13,311Increase1.3 %Increase4.6 %Negative increase25.4 %Negative increase49.3 %
2016Increase742.2Increase13,345Increase0.6 %Negative increase6.3 %Negative increase26.7 %Negative increase51.6 %
2017Increase765.6Increase13,544Increase1.3 %Negative increase5.3 %Negative increase27.5 %Negative increase52.7 %

As a regional manufacturing hub, it is the most industrialized and diversified economy on the continent.

The formal economy of South Africa has its beginnings in the arrival of Dutch settlers in 1652, originally sent by the Dutch East India Company to establish a provisioning station for passing ships. As the colony increased in size, with the arrival of French Huguenots and German citizens, some of the colonists were set free to pursue commercial farming, leading to the dominance of agriculture in the economy.

At the end of the 18th century, the British annexed the colony. This led to the Great Trek, spreading farming deeper into the mainland, as well as the establishment of the independent Boer Republics of Transvaal and the Orange Free State.

In 1870 diamonds were discovered in Kimberley, while in 1886 some of the world’s largest gold deposits were discovered in the Witwatersrand region of Transvaal, quickly transforming the economy into a resource-dominated one. The British annexed the area as a result of the Boer War which witnessed the placement of Boer women and children in British-built concentration camps. The country also entered a period of industrialization during this time, including the organization of the first South African trade unions.

The country soon started putting laws distinguishing between different races in place. In 1948 the National Party won the national elections, and immediately started implementing an even stricter race-based policy named Apartheid, effectively dividing the economy into a privileged white one, and an impoverished black one. The policy was widely criticised and led to crippling sanctions being placed against the country in the 1980s.

South Africa held its first multi-racial elections in 1994, leaving the newly elected African National Congress (ANC) government the daunting task of trying to restore order to an economy harmed by sanctions, while also integrating the previously disadvantaged segment of the population into it. The 1994 government inherited an economy wracked by long years of internal conflict and external sanctions.

The government refrained from resorting to economic populism. Inflation was brought down, public finances were stabilised, and some foreign capital was attracted.[21] However, growth was still subpar.[21] At the start of 2000, then President Thabo Mbekivowed to promote economic growth and foreign investment by relaxing restrictive labour laws, stepping up the pace of privatisation, raising governmental spending[22] and cutting interest rates sharply from 1998 levels.[23][24] His policies faced strong opposition from organised labour. From 2004 onward economic growth picked up significantly; both employment and capital formation increased.[21]

In April 2009, amid fears that South Africa would soon join much of the rest of the world in the late-2000s recessionReserve BankGovernor Tito Mboweni and Minister of Finance Trevor Manuel differed on the matter: whereas Manuel foresaw a quarter of economic growth, Mboweni predicted further decline: “technically,” he said, “that’s a recession.”[25] In 2009 the Nobel-Prize-winning economist Joseph Stiglitz warned South Africa that inflation targeting should be a secondary concern amid the global financial crisis of 2007–2009.[26]

South Africa, unlike other emerging markets, has struggled through the late 2000s recession, and the recovery has been largely led by private and public consumption growth, while export volumes and private investment have yet to fully recover.[27] The long-term potential growth rate of South Africa under the current policy environment has been estimated at 3.5%.[28] Per capita GDP growth has proved mediocre, though improving, growing by 1.6% a year from 1994 to 2009, and by 2.2% over the 2000–09 decade,[29] compared to world growth of 3.1% over the same period.

The high levels of unemployment, at over 25%, and inequality are considered by the government and most South Africans to be the most salient economic problems facing the country.[30] These issues, and others linked to them such as crime, have in turn hurt investment and growth, consequently having a negative feedback effect on employment.[30] Crime is considered a major or very severe constraint on investment by 30% of enterprises in South Africa, putting crime among the four most frequently mentioned constraints.[31]

In April 2017, political tensions in the country arose over the sacking of nine cabinet members including Minister of Finance Pravin Gordhan by the president Jacob Zuma.[32] The finance minister was seen as central to efforts to restore confidence in South Africa. As a result of the tensions, S&P Global cut South Africa’s credit rating to junk status on Monday 3 April 2017.[33] Fitch Ratings followed suit on Friday 7 April 2017 and cut the country’s credit status to the sub-investment grade of BBB-.[34] The South African rand lost more than 11% in the week following the cabinet reshuffling.[33]

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