The Economy of South Africa

GDP

South Africa's Gross Domestic Product (GDP) was worth 408 billion US dollars at the end of 2011. The GDP value of South Africa is roughly equivalent to 0.59 percent of the world economy. Historically, from 1960 until 2011, South Africa GDP averaged 101.0 billion USD reaching an all time high of 363.7 billion USD in December of 2010 and a record low of 7.3 billion USD in December of 1960. 

This graph represents South Africa's GDP from 1960 to 2012, where a clear general trend can be seen whereby, South Africa's economy has been increasing quite rapidly. This trend has enlightened economists in recent years that South Africa could be the next economy to grow exponentially like China or India becoming one of the BRIC countries. 

It has been indicated that South Africa's GDP growth rate had expanded by 3.2% in the second quarter of 2012 over the previous quarter. Historically, from 1993 until 2012, South Africa GDP Growth Rate averaged 3.3 % reaching an all time high of 7.6 % in December of 1994 and a record low of -6.3 % in March of 2009. 

Population

Historically, from 1960 until 2011, South Africa Population has averaged 32.8 Million reaching an all time high of 50.6 Million in December of 2011 and a record low of 17.4 Million in December of 1960. The total population in South Africa was last reported at 50.0 million people in 2010 from 17.4 million in 1960, increasing by an outstanding 187 % during the last 50 years. South Africa has 0.72 percent of the world´s total population which means that one person in every 138 people on the planet is a resident of South Africa.

The South African government intervened population control in the 1960s, where family planning services were offered, and the state paid for the cost of contraceptives. In 1974, a national family planning program was initiated to provide clinical, counseling, and information services. Recently, policy has been adjusted by the national Population Development Program (PDP) established in 1984. PDP objectives are: 1) to stabilize the national population at 80 million people by the end of the next century by using family planning services; 2) to accelerate equal social and economic development of all population groups by increasing education, manpower training, the economic productivity of women, job creation, and adequate housing; 3) to achieve a national total fertility rate of 2.1 children per woman by the year 2010 (2.46 was achieved); 4) to promote basic good health among all population groups by stressing primary health care; and 5) to achieve orderly geographical distribution of the population in the rural areas. 

There are 3800 family planning clinics offering modern contraceptives services at 60,200 points. These services points include infertility treatment as well as education about reproductive health, HIV/AIDS, and other sexually transmitted diseases.

Imports and Exports

South Africa imports were worth 70.2 Billion ZAR (The nations currency) in July of 2012. Historically, from 1990 until 2012, South Africa Imports averaged 23,910.4 Million ZAR reaching an all time high of 76,502.0 Million ZAR in November of 2011 and a record low of 2,982.0 Million ZAR in February of 1991. 

South Africa imports mainly machinery, foodstuffs, equipment, chemicals, petroleum products and scientific instruments. Its principal import partners are: European Union, China, United States, Japan and Saudi Arabia. 

South Africa exports were worth 63.5 Billion ZAR in July of 2012. Historically, from 1990 until 2012, South Africa Exports averaged 23,640.3 Million ZAR reaching an all time high of 68,457.0 Million ZAR in November of 2011 and a record low of 35,44.0 Million ZAR in June of 1991. 

South Africa has rich mineral resources. It is the world's largest producer and exporter of gold and platinum and also exports a significant amount of coal. Another major export is diamonds. South Africa's major exports partners include United Kingdom, United States, Germany, Italy, Belgium, China, and Japan. 

Type of economy

South Africa has a Mixed economy structure where both public and private sectors are present. 

South Africa has a two-tiered economy; one rivaling other developed countries and the other with only the most basic infrastructure. It is a productive and industrialized economy that exhibits many characteristics associated with developing countries, including a division of labor between formal and informal sectors and an uneven distribution of wealth and income. The primary sector is based on manufacturing, services, mining, and agriculture, is well developed. South Africa's economy is ranked 29th in the world and is the largest economy in Africa. 

South Africa has shifted from a primary and secondary economy in the mid-twentieth century to an economy driven primarily by the tertiary sector in the present day which accounts for an estimated 65% of GDP or $230 billion in nominal GDP terms. The country’s economy is reasonably diversified with key economic sectors including mining, agriculture and fishery, vehicle manufacturing and assembly, food-processing, clothing and textiles, telecommunication, energy, financial and business services, real estate, tourism, transportation, and wholesale and retail trade.

South Africa suffers from relatively heavy overall regulation burden compared to developed countries. State ownership and interference impose high barriers to entry in many areas.

50 Facts about the economy of South Africa

• In 2012, at 5.5%, South African interest rates were at a 30-year low.

• South African Tax Revenue has increased from 100 billion ZAR in 1994 to 742.7 billion ZAR in 2011-12.

• South Africa’s debt to GDP ratio is 32% (USA 100%, Japan 200%, UK 90%). The World Bank recommends a ratio of 60%.

• South Africa sold $1.8 billion worth of cars to the US in 2010, putting them ahead of Sweden and Italy as suppliers to the US market. Car sales are projected to grow 10% in 2011 to 460,000 units.

• South Africa exported 36.9% more vehicles in 2010 than 2009.

• The South African stock market rose 16.09% in 2010, ranking 8th out of the G20 nations and ahead of all of the G7 countries (Bespoke Investment Group).

• South Africa is ranked 1st out of 142 countries in respect of regulation of security exchanges according to the World Economic Forum Global Competetiveness Report 2011/12

• South Africa is ranked 1st in respect of auditing and reporting, according to the Global Competitiveness Report 2011/12.

• South Africa ranks 1st out of 60 countries in the Economist’s House Price index for the period 1997 – 2009.

• South Africa's banks rank 2nd in the world for soundness, according to the Global Competitiveness Report 2011/12.

• The South African Rand was the second best performing currency against the US Dollar between 2007 and 2011, according to Bloomberg’s Currency Scorecard.

• South Africa ranked 1st in Platinum output, 2nd in Palladium output, 3rd in Gold output, 6th in Coal output and 9th in wool output. (Economist)

• South Africa is ranked 2nd out of 183 countries for good practice in protecting both borrowers and lenders when obtaining credit for business (World Bank Doing Business Report 2011)

• South Africa is ranked 3rd in the world for protection of minority shareholders interests, according to the Global Competitiveness Report 2011/12.

• South Africa ranked 6th in house price improvement indices as a % change in 2009, and 1st as a % change 1999/2009. (Economist).

• South Africa is ranked 10th out of 142 countries for Strength of Investor Protection, according to the Global Competitiveness Report 2011/12.

• South Africa is ranked 10th out of 183 countries for good practice in protecting investors in business. (World Bank Doing Business Report 2011).

• South Africa ranks 7th out of 45 countries in the "Big Mac Index 2012". The price of a Big Mac is 42% less in South Africa than in the USA. In Switzerland and Norway, it is 62% more.

• South Africa is ranked 12th out of a total of 134 economies in the World Economic Forum’s Global Gender Gap Report 2010, ahead of many developed nations, including, the UK (15th), United States (19), Canada (20), Australia (23) and France (46).

• South Africa ranked 15th in terms of "largest deficits" but as a percentage of GDP is not in the top 40 countries. (Economist).

• South Africa is ranked 23rd out of 81 countries in the Jones Lang LaSalle's "World's most Transparent Real Estate Markets" placing it well ahead of China, Brazil, India and Russia. "Robust governance, strong auditing and a developed legal system" were cited as the main reasons for leading the developing markets in this rating.

• South Africa ranks 24th out of 192 countries in the Economist’s "Largest Gold Reserves" Index and 30th in terms of official US$ reserves.

• In a survey of 192 countries, South Africa’s unemployment as a percentage of economically active population ranked 27th.

• South Africa ranks 28th in terms of number of cars produced and 18th in terms of number of cars sold. (Economist).

• South Africa is ranked 34th out of 183 countries for ease of doing business according to Doing Business 2011, a joint publication of the World Bank and the International Finance Corporation.

• South Africa ranks 41st out of 192 countries in the Economist’s "Biggest Exporters" Index.

• South Africa ranked 50th out of 142 countries in the World Economic Forum’s Global Competitiveness Report 2011/12, up from 54th in 2010/11.

• South Africa ranks 54th in a comparison of the overall tax burden of 150 countries worldwide.

• South Africa ranks in the top 20 countries for agricultural output.

• According to a survey of 62 countries by the World Bank and the IMF, South Africa has the 36th highest foreign debt, ahead of the US, Japan and all the European countries surveyed. The economist ranks South Africa 29th out of 60.

• MTN has been ranked Africa’s most valuable brand in the BrandZ Top 100 Most Valuable Global Brands 2012 survey. MTN becomes the first and only African brand to make the list, debuting at position 88 in the world.

• South Africa ranks as the 61st strongest state out of 177 countries in the Fund for Peace's Failed State Index 2011. The index measures state vulnerability based on 12 social, economic, political and military indicators.

• According to the Global Competitiveness Report 2010/11, South Africa has the 34th most efficient government out of the 139 countries ranked.

Government rules and legislation

Joint ventures

The South African government are in a massive partnership with a leading global pharmaceutica Lonza Limited through the state-owned specialty chemical manufacturer, Pelchem Private Limited, to manufacture the ingredients of Anti-Retroviral (ARV) drugs locally. This is because South Africa is the largest consumer of ARVs in the world and spends 4.2 billion ZAR a year on buying the drugs. The partnership will see the country spending less.

The venture - to be called Ketlaphela - will manufacture Active Pharmaceutical Ingredients, which account for about 75% in the making of generic ARVs. Government will have a 50% stake, Lonza Limited a 30% stake and Pelchem Private Limited will take the remaining 20%
The project is in line with the plans of the South African government to address HIV and Aids through the local and cost effective production of antiretroviral drugs and will create an estimated 22,000 jobs.

Economic Factors

The inflation rate in South Africa was recorded at 4.9% in July of 2012. Historically, from 1981 until 2012, South Africa Inflation Rate averaged 9.7% reaching an all time high of 20.8% in January of 1986 and a record low of 0.1 % in January of 2004.

The benchmark interest rate in South Africa was last reported at 5 %. Historically, from 1998 until 2012, South Africa Interest Rate averaged 13.6 % reaching an all time high of 24.0 % in June of 1998 and a record low of 5.5 % in November of 2010.
In South Africa, the interest rates decisions are taken by the South African Reserve Bank’s Monetary Policy Committee (MPC). The official interest rate is the repo rate. This is the rate at which central banks lend or discount eligible paper for deposit money banks, typically shown on an end-of-period basis.

The unemployment rate in South Africa was last reported at 24.9 % in the second quarter of 2012. Historically, from 2000 until 2012, South Africa Unemployment Rate averaged 25.5 % reaching an all time high of 31.2 % in March of 2003 and a record low of 21.9 % in December of 2008.