The Economy of South Africa

South Africa, the southernmost country on the African continent, renowned for its varied topography, great natural beauty, and cultural diversity, all of which have made the country a favoured destination for travellers since the legal ending of apartheid in 1994. With nine provinces, bounded to the south by 2,798 kilometres (1,739 miles) of coastline that stretches along the South Atlantic and Indian Ocean; to the north by the neighbouring countries of Namibia, Botswana, and Zimbabwe; to the east and northeast by Mozambique and Eswatini; and it enclaves Lesotho.

The Republic of South Africa (RSA) has over 62 million people, and the country is the world’s 23rd-most populous nation, and the second-most populous country located entirely south of the equator, after Tanzania. Covering an area of 1,221,037 square kilometres (471,445 square miles), it is the 24th-largest country in the world. The country became a Trillion-dollar economy in 2024. Pretoria is the administrative capital, while Cape Town, as the seat of Parliament, is the legislative capital. Bloemfontein has traditionally been regarded as the judicial capital. While the largest and most-populous city is Johannesburg, followed by Cape Town and the largest port city in sub-Saharan Africa, Durban.

The economy of South Africa is the most industrialised, technologically advanced, and diversified in Africa. The South African economy is essentially based on private enterprise, but the state participates in many ways. Through the Industrial Development Corporation, the apartheid-era government set up and controlled a wide array of public corporations, many relating to industrial infrastructure. Two such corporations—one, the country’s primary producer of iron and steel; the other, an important producer of oil from coal—were privatized in the 1980s. The Electrical Supply Commission (ESKOM), the major electricity utility, remains government-controlled, but several entities that formerly were branches of government have been converted to public corporations, including Transnet, which runs the railways and harbors.

In the 1990s the government partially privatized airlines and telecommunications, and, despite fierce opposition from trade unions, official economic policy has been to continue partially or completely privatizing many public enterprises. In 2022, South Africa was the number 37 economy in the world in terms of GDP (current US$), the number 34 in total exports, the number 38 in total imports, the number 95 economy in terms of GDP per capita (current US$) and the number 59 most complex economy according to the Economic Complexity Index (ECI). According to observers, growth will quicken in 2024, after a disappointing 2023, as serious electricity shortages start to ease, but the global backdrop will remain tough.

Read Also: The Economy of Tanzania

In February 2024, South Africa’s National Treasury forecast in its budget review of 2024 that GDP growth will reach only 1.3% in 2024 and 1.6% in 2025, a more optimistic projection than the outlook for South Africa by organizations such as the International Monetary Fund (expecting 0.9% in 2024 and 1.3% in 2025). Nevertheless, South Africa’s growth outlook comes in considerably lower than that of the global economy, which is projected to grow by 3.2% for both 2024 and 2025. 2023 was a challenging year for the South African economy – an expected anemic GDP growth of below 1 per cent, influenced by persisting freight, logistics, governance and energy supply constraints, high interest rates and rising fuel and food prices. In addition, adverse weather conditions continue to affect lives and livelihoods and damage infrastructure.

Exports

The top exports of South Africa are Gold ($22.7B), Platinum ($19.1B), Coal Briquettes ($12.7B), Cars ($6.89B), and Diamonds ($6.22B), exporting mostly to China ($23.4B), United States ($10.9B), Germany ($9.96B), India ($9.14B), and Japan ($8.85B). In 2022, South Africa was the world’s biggest exporter of Platinum ($19.1B), Manganese Ore ($2.96B), Chromium Ore ($2.51B), Precious Metal Ore ($1.97B), and Titanium Ore ($656M).

Imports

The top imports of South Africa are Refined Petroleum ($17.1B), Cars ($4.62B), Crude Petroleum ($4.34B), Motor vehicles; parts and accessories (8701 to 8705) ($3.76B), and Broadcasting Equipment ($3.12B), importing mostly from China ($23.5B), Germany ($9.67B), India ($8.32B), United States ($6.11B), and Saudi Arabia ($4.5B).

In July 2024, the increase in South Africa’s year-by-year exports was explained primarily by an increase in exports to China (ZAR5.14B or 34%), India (ZAR2.07B or 38%), and Special Categories (ZAR1.87B or 15%), and product exports increase in Manganese Ore (ZAR2.06B or 46.6%), Chromium Ore (ZAR1.85B or 30.9%), and Gold (ZAR1.75B or 14.2%). In July 2024, the decrease in South Africa’s year-by-year imports was explained primarily by an decrease in imports from United States (ZAR-6.85B or -44.5%), Nigeria (ZAR-3.06B or -99.1%), and Germany (ZAR-2.62B or -19.9%), and product imports decrease in Electric Batteries (ZAR-3.01B or -74.6%), Crude Petroleum (ZAR-2.64B or -29.6%), and Semiconductor Devices (ZAR-2.28B or -78.7%).

Following the May 2024 national elections, a Government of National Unity (GNU) was formed in June 2024, led by President Cyril Ramaphosa. It focuses on constitutionalism, economic recovery, workers’ rights, social protection, and equity. The GNU brings together 11 political parties in a power-sharing agreement and aims to rebuild South Africa’s economy through key reforms for faster growth, better service delivery, and job creation, marking a new direction for economic policy and implementation.