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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

South Africa has a highly developed economy and advanced economic infrastructure, making the country the leading African economy 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 experiencing a sharp decline due to the COVID-19 pandemic, the South African economy bounced back in 2021 (+5% - IMF) driven by exports and household consumption (also thanks to government social transfers and a drawdown of savings, as part of the Economic Reconstruction and Recovery Plan). Sustained high prices and a strong commodity demand will continue to boost exports and government revenues until mid-2022, with the IMF forecasting a growth of 2.2% this year, before slowing to 1.4% in 2022.

South Africa was recently replaced by Nigeria as Sub-Saharan Africa’s largest economy, but the country continues to be a regional leader. South Africa's response to the Covid-19 outbreak has been a standout in the region. However, the effects of the crisis are clearly visible. Government debt reached 68.8% of GDP in 2021 and is expected to increase to 72.3% this year and 74.9% in 2023 (IMF). The difficulties of public companies (such as the state-owned power company Eskom) are compounded by the problems of private companies caused by the pandemic. Although the government is investing in aid programmes, the financial situation of the companies represents a risk to public finances. The country's budget deficit declined to 4.8% in 2021, with the IMF forecasting a deficit increase of 5.1% for 2022 and 5.2% in 2023. Headline inflation, driven by rising food costs and record-high fuel prices, reached 4.4% in 2021 and should stabilize around 4.5% this year and the next.

South Africa's unemployment rate increased to 33.5% in 2021 due to the negative economic impact of the COVID-19 pandemic. The IMF estimates that the rate will increase further in 2022 (34.4%) and 2023 (36.2%). Moreover, 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, where nearly half the adult population lives in poverty: according to the Pietermaritzburg Economic Justice & Dignity group, approximately 30.4 million people live below the upper-bound poverty line of ZAR 1,268. The group estimates that 13.8 million people live below the food poverty line.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 387.85335.34e415.32435.21453.60
GDP (Constant Prices, Annual % Change) 0.1-6.44.61.91.4
GDP per Capita (USD) 6,5995,6256,8617,0827,270
General Government Balance (in % of GDP) -3.9-5.2e-4.8-5.1-5.2
General Government Gross Debt (in % of GDP) 56.369.4e68.872.374.9
Inflation Rate (%) 4.13.3e4.44.54.5
Unemployment Rate (% of the Labour Force) 28.729.2e33.534.436.2
Current Account (billions USD) -10.606.5711.94-3.76-6.34
Current Account (in % of GDP) -2.72.0e2.9-0.9-1.4

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

South Africa is rich in mineral resources. The country is the world's largest producer and exporter of gold, platinum, chrome and manganese, the second-largest palladium producer and the fourth-largest producer of diamonds - with mining rents accounting for around 1.4% of GDP (World Bank, latest available data). Platinum and coal are now both larger contributors to mining output than gold, as the country produces 80% of the world's platinum and has 60% of the world's coal reserves. Coal plays a vital role as an energy source and contributes significantly to the economy, both through the generation of export revenue and employment. Important oil and gas reserves are thought to be situated off-coast, in the Indian Ocean. South Africa has diverse manufacturing industries and is a world leader in several specialised sectors, including railway rolling stock, synthetic fuels, mining equipment and machinery. The industrial sector employs nearly one-fourth of the workforce (22%) and represents 25.2% of the country's GDP (with manufacturing representing 12% alone).

Agriculture represents a small part of the country's GDP (2.4%) and employs 5% of the workforce, a relatively low ratio compared to other African countries. South Africa's agricultural economy is highly diversified and market-oriented. The country is the world's seventh-largest producer of wine and the continent's largest corn and sugar producer. Grains and cereals - such as maize, wheat, barley and soya beans - are the county's most important crops. As such, the country produces all major grains - with the exception of rice. The “2021-2030 Agricultural outlook projections report” produced by The Bureau for Food and Agricultural Policy (BFAP) asserts that the country’s real agricultural GDP could grow by 14% by 2030, with gross production value increasing by almost 2 billion USD.

The services sector employs 72.3% of the workforce and represents 61.4% of the country's GDP. The major sectors of the economy are finance, real estate and business services, followed by general government services. South Africa has a sophisticated financial structure with an active stock exchange that ranks among the world's top 20 in terms of market capitalisation. Nevertheless, the tourism sector has been particularly affected by the COVID-19 pandemic, especially after the discovery of the “Omicron” mutation of the virus in the country, which caused the imposition of travel bans to South Africa from many countries.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 5.3 22.3 72.4
Value Added (in % of GDP) 2.4 25.2 61.4
Value Added (Annual % Change) 13.1 -12.0 -5.4

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
South African Rand (ZAR) - Average Annual Exchange Rate For 1 USD 14.7113.3013.2614.4016.47

Source: World Bank - Latest available data.

 

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Foreign Trade

South Africa is very open to international trade, which represents 56% of the country’s GDP (World Bank). The country mainly exports platinum (12.6%), gold (7.9%), iron ores (7.2%), motor vehicles (5.4%), and coal and similar solid fuels (4.6%). The main imports are petroleum oils (12.6%), transmission apparatus for radio-telephony (3.6%), motor vehicles (3.1), medicaments (2.6%) and automatic data processing machines units (2.1% - Comtrade).

South Africa's top exporting countries are China, the United States, Germany, the UK, Japan and the Netherlands. One-fifth of imports come from China, followed by Germany, the U.S. and India. 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. In 2019, the African Union launched the operational phase of the Africa Continental Free Trade Area (AfCFTA), establishing a single market for goods and services across 54 countries - making it the world's largest free trade area by number of countries.

According to the latest available data from WTO, in 2020, South Africa exported products for USD 85.8 billion, while it imported USD 84 billion of goods. The country imported services for a total value of USD 7.2 billion, whereas its exports of services in the same year reached USD 9.5 billion. South Africa recorded a trade surplus of almost USD 17.5 billion in 2020, its highest in the last 30 years (4.9% of GDP – World Bank).

 
Foreign Trade Indicators 20162017201820192020
Foreign Trade (in % of GDP) 60.658.059.559.256.0
Trade Balance (million USD) 2,2184,8611,6922,67417,484
Trade Balance (Including Service) (million USD) 1,6404,4581,1581,72815,156
Imports of Goods and Services (Annual % Change) -3.91.03.3-0.5-16.6
Exports of Goods and Services (Annual % Change) 0.4-0.72.6-2.5-10.3
Imports of Goods and Services (in % of GDP) 30.128.329.629.425.5
Exports of Goods and Services (in % of GDP) 30.629.629.929.930.5

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20212022 (e)2023 (e)2024 (e)2025 (e)
Volume of exports of goods and services (Annual % change) 12.21.83.13.12.9
Volume of imports of goods and services (Annual % change) 15.111.34.44.03.6

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
South Africa is a member of the following international economic organisations: African Union, WTO, G-20, G-24, G-77, ICC, IMF, among others. For the full list of economic and other international organisations in which participates South Africa click here. International organisation membership of South Africa is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by South Africa can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)
2020
China 11.5%
United States 8.4%
Germany 7.5%
United Kingdom 5.0%
Japan 4.5%
See More Countries 63.2%
Main Suppliers
(% of Imports)
2020
China 20.8%
Germany 9.1%
United States 6.4%
India 5.2%
Saudi Arabia 3.9%
See More Countries 54.6%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Cyril RAMAPHOSA (since February 2018) – ANC ; the president is both chief of state and head of government
Executive Deputy President: David MABUZA (since February 2018) - ANC
Next Election Dates
Presidential: May 2024
Legislative (National Council of Provinces and National Assembly): 2024
Current Political Context
In May 2019, Cyril Ramaphosa was elected president with 57% of the votes, which allowed his party (ANC) to maintain an absolute majority. However, this score – as well as voter turnout (66%) – was the lowest in thirty years.
2021 was characterized by civil unrest, which occurred in the KwaZulu-Natal and Gauteng provinces from 9 to 18 July, as a consequence of the imprisonment of former President Jacob Zuma and of the increased economic difficulties of the population. The protests were the most violent that the country experienced since the end of Apartheid.
In the municipal elections held in November 2021, the governing African National Congress (ANC) has dipped below 50% of the vote for the first time in South Africa's democratic history. The second party was the Democratic Alliance with 19.8% of the votes, followed by the rising leftist Economic Freedom Fighters (EFF) party (10.5%).
Main Political Parties
  • The African National Congress (ANC): ruling party in power since the end of apartheid and Nelson Mandela's election in 1994; consistently wins at least 60% of the vote, although its popularity declined by several percentage points between 2004 and 2014; centre-left to left-wing, but allied with the far left groups, the Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP)
  • Democratic Alliance (DA): official opposition, centrist, supports liberal democracy and free market principles, progressively gaining in popularity
  • Economic Freedom Fighters (EFF): far left, Marxist, has been gaining popularity
  • Inkatha Freedom Party (IFP): conservative, right-wing, dominated by rural, Zulu-speakers based in the KwaZulu-Natal region; emphasises social justice and the role of traditional communities. The party`s popularity has been consistently decreasing in recent years.
Executive Power
The President is both the chief of state and the head of the Government. The President is indirectly elected by the Parliament (lower house) to serve a five-year term. He/She is usually the leader of the largest party. The President is the also commander-in-chief of the armed forces, declares war or peace and appoints the Cabinet.
Legislative Power
South Africa has a bicameral legislature. The National Council of Provinces (the upper house) has 90 seats, with 10 members elected by each of the nine provincial legislatures for five-year terms. The National Assembly ( the lower house) has 400 seats; the members are directly elected in multi-seat constituencies by proportional representation vote to serve 5-year terms.

The executive branch of the Government is directly or indirectly dependent on the support of the Parliament, often expressed through a vote of confidence. The President can dissolve the Parliament if a majority of the members of the National Assembly seek its dissolution and if has been at least three years since the last election.

 

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COVID-19 Country Response

COVID-19 epidemic evolution

To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID19 disease in the South Africa, please visit the website of the National Institute for Communicable Diseases (NICD) and the COVID-19 Corona Virus South African Resource Portal with the official data. For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

To find out about the latest public health situation in South Africa and the current sanitary measures in vigour, please consult the Department of Health’s Covid-19 Tool Kit .

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions
For the up-to-date information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the South African Ministry of Trade, Industry and Competition. The South African Revenue Service (SARS) has issued guidance concerning value added tax (VAT) rules in response to the coronavirus (COVID-19) pandemic. For the updated overview of the introduced trade import and export restrictions and other trade measures (ex. tariffs reductions) due to COVID-19 pandemic, please consult the section dedicated to South Africa on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan

For information on the economic recovery scheme put in place by the South African government to address the impact of the COVID19 pandemic on the South African economy, please read Minister of Finance Tito Mboweni’s Media briefing on economy and Coronavirus COVID-19), as well as the "Economic Relief" section on the national official portal SAcoronavirus.co.za. Additional information can be sourced on the page dedicated to South Africa on KPMG's website.
For a general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the South African government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to South Africa in the IMF’s Policy Tracker platform.  

Support plan for businesses

For information on the local business support scheme established by the South African government to help small and medium-sized companies to deal with the economic impacts of the COVID19 epidemic on their activity, please consult the South African government’s “Support to business” page. For an overview of international SME support policy responses to the COVID-19 outbreak 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.

Support plan for exporters

For the up-to-date information on possible support plans for exporters in South Africa, if applicable, please consult the website of the South African Ministry of Trade, Industry and Competition.

 

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