Orange processing plant in South Africa

Economic situation Great potential, slow growth

South Africa displays all the typical characteristics of an emerging economy. The country is seen as a pioneer on the continent, with its highly developed economy, a world-class financial sector, a wealth of raw materials, a comparatively good infrastructure, some excellent academic facilities and an independent and reliable legal system. Yet social development has not kept pace with economic progress. Ultimately, therefore, South Africa must be viewed as a developing country.

Momentum has declined

In recent years, the country has lost a lot of its economic momentum. Since 2014, growth rates have been below two per cent, with expansion of just 0.6 per cent being recorded in 2018. The International Monetary Fund (IMF) is predicting a similar level of growth in 2019 and expects the economy to continue recovering slightly over the next few years. This will depend, however, on the government actively pursuing its programme of reforms.

If the economic indicators remain unchanged, the country will not be able to permanently resolve its social problems. Private companies in particular are reluctant to invest. They are put off by uncertainties about the government's economic policy, the country's skills shortage, energy supply problems, frequent industrial action and high crime levels.

Skills shortage

Under the apartheid regime, people from the disadvantaged sections of the population did not generally receive any form of vocational training that actually met the needs of the modern labour market. Job seekers are now also facing competition from millions of migrant workers from neighbouring countries, who hope to find income opportunities in South Africa. Repeated outbreaks of anti-foreigner protests in recent years are a sign of growing social tensions.

Development potential

South Africa has great development potential. The best prospects for economic growth are in manufacturing, mining, tourism and solar and wind energy.