By adjusting for these factors where required, World Economics provides a more accurate picture of South Africa’s true economic size and potential. The year ahead holds promise, and South Africa is ready to seize its opportunities. Make the best decisions about the future of your business with the most reliable economic intelligence. GDP per capita of USD 6,111 compared to the global average of USD 10,589. Africa and Southern Africa, cannot afford another generation facing economic uncertainty, poverty and unemployment, and the region needs to find better ways of lifting itself out of the economic doldrums it currently finds itself in.
- FocusEconomics collects South African GDP projections for the next ten years from a panel of 27 analysts at the leading national, regional and global forecast institutions.
- We also wanted to find out if renewables can replace non-renewable energy as a source and enabler of economic growth.
- Africa needs to be more than a tourist destination or a source of critical mineral and metal resources if it is to emerge from its current economically depressed state into a global player of significance and this will entail changes to current thinking.
- Particularly, the economic growth has been hit by reduced output in the agricultural sector in South Africa, with a 10% decline in Q3 alone according to Stats SA, although there is some question over the accuracy of these numbers.
Does an improving business environment boost GDP?
In South Africa this is expected to widen from an initially projected 4.5% to 5% of total GDP. The national debt as a share of GDP is anticipated to hit 75.5%, that will see a large portion of government income used solely to service debt repayments. A lot will depend on the responses of the various authorities, and their commitment to creating better environments for investments to take place. However, given the enormity of resources required for scaling up, external financial flows as complementary sources of financing remain a crucial hurdle to overcome for the region. Economic activity declined further in the primary sector, while the output of the secondary and tertiary sectors expanded at a slower pace.
Non-renewables, renewables and economic growth: what’s there to know?
These have held the sector back from making a bigger contribution to economic growth. Our research suggests that relying on non-renewable https://istorepreowned.co.za/ energy, like coal, won’t lead to long-term growth for South Africa. At the start of 2025, there is greater optimism about the South African economy compared to 12 months ago. Economists expect lower inflation, a decline in interest rates and higher economic growth this year compared to 2024. All of this also points to better conditions for consumers in terms of their spending power.
Sustainable economic growth in South Africa will come from renewables, not coal: what our model shows
Before this, South Africa’s economic growth was heavily driven by coal consumption. Coal-fired electricity from the country’s power utility, Eskom, is still cheaper for households than leaving the grid and purchasing their own renewable energy infrastructure (solar energy systems). The government has not funded the infrastructure needed to unlock South Africa’s vast renewable energy potential. Before this, South Africa’s economic growth was heavily driven by coal consumption. This is because South African energy regulators have not adopted strong enough measures for renewable energy to enable long-term growth. They have not funded the mass rollout of renewable energy, or connected renewables to sasol mining the national grid.
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Key manufacturing areas include automotive, machinery, mining equipment, textiles, and processed foods. The Port of Maputo, has been a major channel for both imports and exports in the region, and the unrest in the country could https://standardbank.co.za/ once again constrict access to markets and affect prices. Additional challenges for the SADC region are the geopolitical tensions in areas such as Mozambique that have recently created massive challenges for the region and unless resolved could cause more headwinds for the region. South Africa has lost its competitive advantages with its rail and ports infrastructure collapsing that has deeply affected its ability to compete in the international market.
The government should urgently set up policies and actions to overcome the barriers to using renewable energy. Only then will renewable energy have a permanent, positive influence on economic growth. To achieve substantial structural transformation, Southern Africa needs to focus on attracting strategic investments in key sustainable development goal sectors such as energy, productivity-enhancing technology and innovation, and key transport infrastructure.
The Average GDP growth for the SADC region is expected to hit only 1,8% growth in 2024, almost half the 3,2% growth anticipated for Africa as a whole. This marginal growth is still way below the IMF projected growth number of 1,1% for South Africa for the year, and below the projected GDP growth across Africa of 3,2% for 2024 according to the African Development bank’s latest forecast. While real GDP was still 0.3% higher in the third quarter of 2024 than that of Q3 in 2023 and the average level of real output in the first three quarters of 2024 was 0.4% higher than in the same period of 2023, it https://www.liberty.co.za/ still paints a bleak picture.