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Economic and political overview

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. South Africa's economy has faced challenges in recent years, with power shortages and disruptions to rail and port operations limiting growth to 0.7% in 2023. Growth remained subdued in 2024, estimated at 0.8% by the IMF, due to election-related uncertainty and severe droughts. However, power generation stabilized, and following the formation of a reform-oriented Government of National Unity in June, confidence among consumers, businesses, and investors rebounded. Real GDP growth is projected to rise to 1.5% in 2025, driven by recovering private consumption and investment, supported by stable electricity generation. Over the medium term, growth is expected to average 1.8%, with investment improving as reforms address electricity and logistics bottlenecks (IMF).

South Africa's public finances have deteriorated significantly over the past 15 years. Since the Global Financial Crisis (GFC), fiscal deficits have averaged over 4% of GDP, driven by rising wage costs, social transfers, and support for state-owned enterprises (SOEs). Despite some consolidation efforts before the pandemic, including tax increases and a spending rule, revenues fell short of expectations while public spending continued to rise, pushing public debt from 25% to 74% of GDP from FY08-23. The pandemic further strained public finances. Rising debt, tight financing conditions, and the loss of investment grade have increased interest payments to nearly 20% of revenues, limiting funds for other priority spending, including investment. In FY23, the deficit reached 5.9% of GDP, 2 percentage points higher than the previous year, due to lower tax revenues (mainly from corporate income taxes) and higher spending (especially on debt service and support for Eskom, the electricity SOE). As a result, the primary balance showed a deficit of 0.8% of GDP, down from a surplus of 0.7% in FY22 (data IMF). For 2025, the primary deficit should increase to 1% of GDP, before turning positive in 2026 (+0.3%). With general fiscal deficits expected to remain high in the medium term, public debt is projected to rise from 75.7% in 2024 to 80.1% by 2026 (IMF data). In 2024, banks maintained strong capitalization with a capital adequacy ratio (CAR) of 17.1% and liquidity with a liquidity coverage ratio (LCR) of 146.3%. Profitability remained stable, with a return on equity (ROE) ratio of 15.6%, despite non-performing loans (NPLs) reaching 5.2% of total loans, above pre-pandemic levels. NPLs are covered by standard IFRS provisions. Inflation slowed from 5.9% in 2023 to an average of 4.6% in the first eleven months of 2024, driven by lower fuel and food prices. For 2025, the IMF expects inflation to decrease to 4%.

Unemployment fell to 32.1% in Q3 2024, as employment growth picked up. However, youth unemployment remains high at 60.2%, and 8.1% of the working-age population is classified as discouraged from work (NEET – data IMF). The lack of job opportunities continues to drive high inequality in South Africa, although average nominal wages and salaries kept pace with inflation in Q3 2024. 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 16,009 in 2024.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 380.59403.05418.05432.51446.80
GDP (Constant Prices, Annual % Change) 0.71.11.51.61.5
GDP per Capita (USD) 6,1126,3776,5176,6436,762
General Government Balance (in % of GDP) -5.9-6.2-6.1-5.4-5.1
General Government Gross Debt (in % of GDP) 73.475.077.479.180.6
Inflation Rate (%) 5.94.74.54.54.5
Unemployment Rate (% of the Labour Force) 33.133.733.934.134.3
Current Account (billions USD) -6.07-6.64-8.05-8.58-9.46
Current Account (in % of GDP) -1.6-1.6-1.9-2.0-2.1

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Agriculture represents a small part of South Africa's GDP (2.6%) and employs 19% of the workforce (World Bank). The country's agricultural economy is highly diversified and market-oriented. South Africa consistently ranks among the top wine-producing countries and is 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 USD 2 billion. According to the latest figures from Statistics SA, agricultural GDP declined by 28.8% in Q3 2024 due to drought affecting maize, soybeans, wheat, and sunflower crops, as well as adverse weather impacting fruit and vegetable production.

South Africa is rich in mineral resources. The country is among the world's largest producers and exporters of gold, platinum, chrome and manganese, the largest palladium producer and the fourth-largest producer of diamonds - with the mining sector accounting for around 6.2% of GDP (data Mineral Council). 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 a significant share of the world's coal reserves. Coal continues to play 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, but these resources remain largely unexplored and unexploited. 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. Overall, the industrial sector employs 18% of the workforce and represents 24.6% of the country's GDP (with manufacturing representing 12% alone). According to the latest figures from the National Statistical Office, manufacturing production increased by 0.2% in the third quarter of 2024 compared with the preceding quarter.

The services sector employs 64% of the workforce and represents 62.6% of the country's GDP. The major sectors of the economy are finance, real estate and business services, together with 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. Tourism contributes 3.5% to South Africa’s GDP, more than agriculture, utilities and construction (official governmental data). Despite not fully recovering to pre-pandemic levels, South Africa's tourism sector continues to grow, with 2024 international arrivals reaching 8.92 million—a 5.1% increase from 2023, according to Statistics South Africa.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 18.8 17.7 63.5
Value Added (in % of GDP) 2.6 24.6 62.6
Value Added (Annual % Change) -4.8 -0.4 1.2

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 around 65% of its GDP (World Bank, latest data available). The country mainly exports platinum (9.7% of total exports, as the country produces 80% of the global output), coal (7.1%), iron ores (5.9%),  gold (5.7%), and motor vehicles (5.4%). The main imports are petroleum oils (18.7%), motor vehicles (4%), crude oil (3.8%), and telephones (3.1% - Comtrade for 2023).

South Africa's top exporting countries are China (11.3%), the United States (7.5%), Germany (6.8%), Mozambique (5.6%), and Japan (5.2%). One-fifth of imports come from China, followed by the U.S. (8.6%), Germany (8.1%), India (7%), and the UAE (3.7% - 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).

According to the South African Reserve Bank, the country's trade surplus narrowed from ZAR 179.5 billion in Q2 2024 to ZAR 177.0 billion in Q3 due to a sharper decline in exports than imports. Both volumes and prices of goods and services fell. The services, income, and current transfer deficit improved for the second consecutive quarter, narrowing from ZAR 254.7 billion to ZAR 247.8 billion, reducing its GDP ratio from 3.5% to 3.4%. South Africa's terms of trade (including gold) improved slightly in Q3 2024 as the rand price of imports fell more than exports.

 
Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 53.950.856.064.865.2
Trade Balance (million USD) 2,48717,73130,67013,9045,553
Trade Balance (Including Service) (million USD) 1,93915,07926,2088,3411,217
Imports of Goods and Services (Annual % Change) 0.6-17.69.615.03.9
Exports of Goods and Services (Annual % Change) -3.3-12.09.76.83.7
Imports of Goods and Services (in % of GDP) 26.723.224.931.432.4
Exports of Goods and Services (in % of GDP) 27.227.631.133.432.8

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 3.53.63.73.73.7
Volume of imports of goods and services (Annual % change) 3.74.33.93.93.8

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)		 2023
China 11.3%
United States 7.5%
Germany 6.8%
Mozambique 5.6%
Japan 5.2%
See More Countries 63.6%
Main Suppliers
(% of Imports)		 2023
China 20.5%
United States 8.6%
Germany 8.1%
India 7.0%
United Arab Emirates 3.7%
See More Countries 52.1%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Cyril RAMAPHOSA (since February 2018, re-elected 19 June 2024) – ANC ; the president is both chief of state and head of government
Vice President: Paul MASHSATILE (since 7 March 2023)
Next Election Dates
Presidential: May 2029
National Council of Provinces: June 2029
National Assembly: May 2029
Current Political Context
On May 29, 2024, South Africa conducted general elections to select a new National Assembly and provincial legislatures across its nine provinces. The African National Congress (ANC) experienced a significant decline in support, losing the parliamentary majority it had maintained since 1994, though it remained the largest party. The Democratic Alliance (DA) secured second place with a slight increase in support. uMkhonto we Sizwe (MK), a left-wing populist party established six months prior and led by former President Jacob Zuma, achieved third place. On June 14, 2024, the ANC, DA, Inkatha Freedom Party (IFP), and Patriotic Alliance (PA) formed a national unity government, resulting in the re-election of Cyril Ramaphosa as President of South Africa.
In December 2023, South Africa filed a case against Israel at the International Court of Justice (ICJ), alleging violations of the 1948 Genocide Convention due to Israel's actions in Gaza. South Africa contends that Israel's military operations demonstrate an intent to destroy the Palestinian population in Gaza. The ICJ has acknowledged receipt of South Africa's application, and Israel is required to respond by July 2025.
Main Political Parties

The main political parties in South Africa are:

  • African National Congress (ANC): ruling party in power since the end of apartheid and Nelson Mandela's election in 1994. Although its popularity declined by several percentage points between 2004 and 2024, in the latest elections it obtained 40% of the votes
  • Democratic Alliance (DA): official opposition, centrist, supports liberal democracy and free market principles, progressively gaining in popularity
  • uMkhonto weSizwe ('Spear of the Nation' - MK): left-wing populist, founded by former president Jacob Zuma just six months before the June 2024 elections, it obtained the third-highest number of votes
  • Economic Freedom Fighters (EFF): far-left, Marxist
  • 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
  • Patriotic Alliance (PA): right wing to far-right, conservatism
  • Freedom Front Plus (FF+): right-wing, advocates for the rights of Afrikaans-speaking South Africans and minority groups
  • ActionSA: centre-right, liberism.
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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