Economic Overview

South Africa has a highly developed economy and advanced economic infrastructure, making the country the leading African economy (with Nigeria) and home to around three-quarters of the largest African companies. The national government has been investing in significant policy improvements to restore macroeconomic stability in the country. Even though the government stated that boosting economic growth, cutting unemployment and avoiding downgrades by credit-rating agencies constituted the economic key priorities, South Africa still faces rising public debt, inefficient state-owned enterprises, and spending pressures, which have reduced the country’s global competitiveness. After growing by 1.9% in 2022, GDP expanded by 0.4% and 0.6% in the initial two quarters of 2023, fueled by investments in infrastructure, machinery, and equipment. However, household consumption experienced its first contraction since 2021 in the second quarter of 2023. For the year as a whole, the IMF estimated growth at 0.9%, also due to persistent energy crisis stemming from mismanagement at the state-owned power utility Eskom, which had a severe impact on electricity-intensive sectors such as mining, paper, metals, and retail. Despite efforts to tackle the crisis, President Cyril Ramaphosa declared a "state of national disaster" in February 2023. The IMF expects GDP to grow by 1.8% this year and 1.6% in 2025, with investment as the main driver, while private consumption should remain subdued.

South Africa was recently replaced by Nigeria as Sub-Saharan Africa’s largest economy, but the country continues to be a regional leader. Concerning public finances, during the first half of 2023, tax revenue collection experienced a notable decline, and the public sector wage settlement exceeded budgeted amounts. Consequently, the fiscal deficit deteriorated significantly to -6.2% of GDP, marking a reversal after two years of fiscal consolidation. Projections indicate that the fiscal balance will stabilize in 2024 and 2025 as the fiscal stance reverts to contractionary measures. The debt-to-GDP ratio continued to increase in 2023 (to 73.7% from 71.1% one year earlier), together with debt servicing costs, and should reach 78.8% by 2025 (IMF). Moreover, the combined gross consolidated public debt, including both non-financial and financial corporations, stands at nearly 120% of GDP (Coface), and providing direct support to struggling state-owned enterprises could potentially exacerbate the existing debt burden. The yearly average inflation rate settled at 6% in 2023, remaining relatively high during January–May, consistently surpassing 6% in the headline rate; before moderating below this threshold for the subsequent seven months of the year (official governmental data). The IMF sees inflation declining to around 4.5% over the forecast horizon.

South Africa’s unemployment rate is still high, but continued on its downward path in 2023: as of the third quarter, the country’s official unemployment rate dipped below 32% for the first time since the third quarter of 2020 (Statistics SA). Furthermore, unemployment rates are much higher among the young population and the black majority of South Africans, further increasing inequality in a country considered one of the most unequal in the world: according to the latest data available from the World Bank, around 55.5% of the population lives below the national upper poverty line. The IMF estimated the average GDP per capita (PPP) at USD 16,211 in 2023.

Foreign Trade

South Africa is very open to international trade, which represents around 65% of its GDP (World Bank, latest data available). The country mainly exports platinum (13.7%, as the country produces 80% of the global output), coal (11%), iron ores (5.3%), motor vehicles (4.7%), and gold (4.3%). The main imports are petroleum oils (16.7%), motor vehicles (4%), crude oil (3.9%), and telephones (3.3% - Comtrade).

South Africa's top exporting countries are China (9.6%), the United States (8.8%), Germany (7.3%), Japan (7%), and the UK (5.2%). One-fifth of imports come from China, followed by India (7.4%), Germany (7.3%), the U.S. (7.3%), and Saudi Arabia (4% - Comtrade). South Africa is the EU's largest trading partner in Africa: exports to the EU have been growing and becoming more diverse, with the country moving from mainly commodity-based products to a more diversified export profile that includes manufactured goods (World Bank). In 2022, South Africa conducted intra-African merchandise trade worth around USD 40 billion, 17% of its total merchandise trade (+13% y-o-y). South Africa's key African trading partners included Mozambique, Botswana, Namibia, and Zimbabwe, collectively contributing to 51% of its intra-African merchandise trade.

According to the latest available data from WTO, in 2022, South Africa exported products for USD 122.9 billion, while it imported USD 136.2 billion of goods. The country imported services for a total value of USD 17.8 billion, whereas its exports in the same year reached USD 12.3 billion. The overall trade balance was estimated to be positive by 2% of GDP in 2022 (World Bank). According to the South African Reserve Bank, in Q3 2023, South Africa's trade surplus with the world widened to ZAR 189 billion, driven by a significant drop in merchandise imports compared to exports, including net gold exports. The terms of trade worsened as import prices rose and export prices fell due to declining global commodity prices. Despite increases in manufacturing and agricultural exports, overall merchandise exports dropped by 3%, mainly due to a decline in non-gold mining exports. Merchandise imports decreased by 9.5%, reversing 12 consecutive quarters of increases.

COVID-19 Country Response

Travel restrictions

Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.

Import & export restrictions

A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

The overview of the economic and fiscal measures is available on the page dedicated to South Africa on the KPMG's website.
For a general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) undertaken by the South African government, please consult the country's dedicated section in the IMF’s Policy Tracker platform.

Support plan for businesses

For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.