Economic situation Great potential, slow growth
In recent years, the country has lost a lot of its economic momentum. Between 2014 and 2019, growth rates ranged from just 0.3 to 1.5 per cent. In 2020, the economy contracted by 6.3 per cent due to COVID-19. In 2021 and 2022, growth rates of 4.9 and 2 per cent respectively were reached. The International Monetary Fund (IMF) expects growth of only 0.3 per cent for 2023. Economic recovery will depend 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.
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. The skilled labour shortage is now holding back the ambitious growth plans of the government and the corporate sector.
Job seekers are also facing competition from millions of migrant workers from neighbouring countries, who hope to find income opportunities in South Africa. One sign of growing social tension is the repeated outbreak of anti-immigrant violence, most recently – on an increased scale – in 2019.
South Africa has great development potential. The best prospects for economic growth are in manufacturing, mining, tourism and solar and wind energy.
However, it is the country’s people who constitute its greatest potential, albeit a potential that has not yet been sufficiently harnessed. Through its constitution, South Africa has created the necessary preconditions for equality of opportunity as regards access to education and to material and natural resources. This provides a basis for society to develop successfully along democratic and pluralistic lines.
As at: 25/08/2023