South African economy

Main article: South Africa (South Africa)

GDP

2022

GDP growth of 2%

In 2022, the South African economy grew by about 2% against 4.9% in 2021. Thus, the rate of GDP growth has decreased by about 2.5 times. Such data are provided in the report of the Department of Statistics of the Republic of South Africa, which was published on March 7, 2023.

It is noted that the country's GDP shows positive dynamics for the second year in a row: at the end of 2021, growth was also recorded. Moreover, in 2022, a historical maximum was recorded - 4.6 trillion rands (approximately $0.25 trillion at the exchange rate as of March 13, 2023). For comparison, in 2021 this figure was 4.5 trillion rand.

Although GDP reached a record high in 2022, the economy grew by only 0.3% compared to 2019 (before the start of the COVID-19 pandemic), which amounted to 4.58 trillion rand, the study says.

GDP growth in the financial sector in 2022 was 3.9% compared to the previous year. In the field of transport and communications, an increase of 8.6% was recorded on an annualized basis. Personal services showed an increase of 2.7%. Growth in the segment of trade, catering and residential services reached 3.5%. At the same time, sectors such as mining, manufacturing, housing and communal services (electricity, gas and water), the construction industry, as well as public services in 2022 showed negative dynamics.

The report notes that six segments of the South African economy have not yet recovered to the level observed before the COVID-19 pandemic. Construction is in the worst condition: in 2022, the result here was 23.1% lower compared to 2019. On the other hand, agricultural activity in South Africa was stable, despite all sorts of difficulties: in this area, GDP in 2022 grew by 25.4% compared to 2019.^[1]

South Africa's share of global PPP GDP shrinks to 0.59%

Main article: World Economy

GDP size forecast - $0.42 trillion

2021: GDP size - $0.42 trillion

2018: GDP - $6,560 per person

2020: South Africa's economy suffers worst downturn in 100 years

In early March 2021, Statistics South Africa published a report according to which in 2020 the country's economy experienced the strongest decline in the last 100 years. The reason was pandemic restrictions that undermined production and disrupted trade, but economists believe that South Africa was in crisis even before the first cases of infection appeared.

If in 2019 South Africa's gross domestic product grew by 0.2%, then in 2020 it decreased by 7%. Such a decline in the economy in the country has not been observed since 1920, but still the losses were less than the members of the National Treasury who laid the budget for the year assumed.

Economists believe that South Africa is only able to return to pre-pandemic levels in 2024, as long-standing restrictions such as electricity shortages and a slow reform program, as well as repeated waves of COVID-19, will hinder growth. The Reserve Bank of South Africa has already reported rate hikes in the second quarter of 2021. According to experts, the economic recovery may also be affected by a reduction in government spending and a weak recovery in employment.

At the end of February 2021, South Africa lifted most of the restrictions related to COVID-19 and introduced in March 2020. Nevertheless, experts believe that the country's economy was in recession even before the start of the pandemic and was stuck in the longest cycle of recession since World War II. The reason for this, according to economists, was the paralysis of politics and weak business ties, which affect long-term investments. Under such conditions, private sector companies do not risk investing large amounts of money in the development of domestic projects, and the economy is stagnating.^[2]

Over 20 years, South Africa's GDP has grown by 200%.

Non-financial debt

2022: Aggregate non-financial debt

Public debt $6.7 thousand per capita

Power

2023: Introduction of a national disaster regime in the country due to power shortages

In February 2023, the President of the Republic of South Africa, Cyril Ramaphosa, announced the immediate introduction of a "national disaster regime" in the country due to the ongoing energy crisis, which began to gain momentum from November 2022.

The opposition is staging mass protests against the president and the African National Congress party, which has remained ruling for almost 30 years.

Against this background, the President of South Africa announced the upcoming reshuffle in the Cabinet of Ministers to optimize the further work of the government and combat the energy problem. Ramaphosa said that the crisis should be resolved by the end of 2023, but similar promises were made during his election campaign in 2018.

2022: Energy shortage crisis due to worn-out power plants

Most South African power plants were built in the 20th century. They are close to decommissioning and lack the capacity to provide customers with stable electricity. At the same time, 83% of all energy generated is coal.

The state-owned company Eskom, which is engaged in the supply of electricity throughout the country, constantly faces criticism due to incompetent management and corruption scandals. Recommendations for restructuring the company into individual small enterprises were discussed at the end of the 20th century. However, until 2007, the state considered the possibility of privatization of the enterprise, and therefore the proposals were not taken into account.

Poor management, outdated infrastructure and advanced corruption have left Eskom unable to cope with the growing demand for electricity. Since 2007, periodic power outages have begun across the country, sometimes lasting three to four hours a day.

In response to the crisis, Eskom began to build several new power plants, as well as reduce loads by controllably disconnecting sections of the power system according to a pre-arranged schedule. In addition, South Africa has completely stopped exporting electricity to other countries.

In 2021, the energy crisis worsened again when accidents occurred at eight coal-fired power plants almost at the same time due to their significant obsolescence.

Since September 2022, the situation has deteriorated markedly due to fires at several power plants and power outages during a test of a new nuclear power plant. Generating capacity fell by at least half. Eskom announced planned maintenance of the stations, resulting in more power outages. Site shutdowns have reached a record 12 hours a day in some regions. The crisis has seriously hit all areas of the economy: from agriculture to heavy industry.

Real international assistance cannot be expected: the European Union, in favor of the "green agenda," allocated a grant of 280 million euros for the transition of South Africa to the production of environmentally friendly energy. However, these funds are critically small to at least somehow influence the situation.

2020: Energy consumption per capita

and

2019: Electrification

Mining

2022

Among the top 10 leading countries in the production of critical raw materials

10th in the world in uranium mining with 200 tons

The rise of coal supplies to Europe 6 times against the background of the conflict in Ukraine

Coal sales from the Republic of South Africa (South Africa) to Europe increased eightfold in the first six months of 2022 - Thungela Resources. The company said Europe was competing with Asia for South African coal.

The Netherlands, Germany, Poland, Denmark, France, Italy and Ukraine are among the European countries increasing purchases.

In the first five months of 2022, European countries imported more than 3 million tons of coal from South Africa. This is more than 40% more than the total volume in 2021. The dynamics is associated with the sanctions imposed by the EU countries against Russia after the start of a special operation in Ukraine.

Trade

2022

G7 countries are the main export destination

China is the largest export destination

2021: South Africa is the world's No. 4 coal exporter

2019: Computer Device Export Volume

2018

Gold is the main export commodity

Gasoline price

2015: Top ten global apple exporters with 5.5% share

Drug traffic

From Afghanistan, through the southwestern coast of Pakistan, heroin is transported using small wooden dow boats to the northern coast of Mozambique. There, heroin is packed and moved in small trucks to Johannesburg, and from there goes to Europe.

Telecom

Main article: Communication (South Africa market)

• Carrier MTN Group

2018: Internet penetration compared to other countries

South Africa IT Market

2022: More than 150 start-ups

Tourism

Alcohol market

Minimum age to purchase alcoholic beverages

Agriculture

2021: Share of farmland - 80%

2019: Low use of pesticides in agriculture

R&D

2020: R&D spending - $5bn

The richest entrepreneurs

Salaries

2023: Minimum wage - $226

2020: Average salary in the country reached $1,287 per month

In June 2020, according to the Department of Statistics of South Africa, the average salary in the country reached $1,287 per month (90,000 rubles), "thereby far exceeding the average monthly salary in the Russian Federation. However, in attempts to compare Russia and Africa, observers, to put it mildly, do not very much represent the specifics of the South African salary sector.

In fact, we are talking only about the formal non-agricultural sector of the economy. There, in a number of industries, earnings are really quite high (according to April - an average of 22.5 thousand. ZAR, or almost $1.3 thousand). Such salaries are the realities of large state-owned companies (Eskom, SABC, Denel, etc.), protected by labor legislation and traditionally strong trade unions.

And such earnings are in many ways a privilege, while unemployment in the country is simply monstrous. So in fact, the rights of the few officially employed and virtually irreplaceable workers are paid by the unemployed.

In addition, there is a serious regional and especially racial imbalance in South Africa - this is a country of highly paid white professionals and a prosperous black middle class. True, representatives of the white community are openly discriminated against when hiring (large companies have ratings of "blackness" of enterprises that make it easier for them to access government contracts). However, the historically strong positions of whites in the banking and financial sector and in farming provide them with fairly high standards of life and consumption by European standards.

Many representatives of the least prosperous community - black - earn in the shadow and informal sector (retail, crime), there is no way to calculate and statistically process their average earnings. And this is a large and traditionally underestimated sector by statistics, embracing a huge variety of goods and services - from the famous Muti market in Durban to semi-underground spaza shops and food stalls in townships. The average monthly income in such disadvantaged suburbs, even in the best years, does not exceed $150-200 for a whole large family.

Labour market

2022: Proportion of workers aged 65 or over - above 5%

Unemployment

For the last quarter of 2019, according to the same statistical department of the country, it reached a record 29.1%.

Consumption

Meat

2023: Poultry meat is the most consumed type of meat

Vegetables

2018: Vegetable consumption - 40 kg per capita

Notes