Panorama econòmic

Economic indicators

South Africa has a highly developed economy and advanced economic infrastructure, making the country the leading African economy (with Nigeria) and home to around three-quarters of the largest African companies. South Africa's economy has faced challenges in recent years, with power shortages and disruptions to rail and port operations limiting growth to 0.7% in 2023. Growth remained subdued in 2024, estimated at 0.8% by the IMF, due to election-related uncertainty and severe droughts. However, power generation stabilized, and following the formation of a reform-oriented Government of National Unity in June, confidence among consumers, businesses, and investors rebounded. Real GDP growth is projected to rise to 1.5% in 2025, driven by recovering private consumption and investment, supported by stable electricity generation. Over the medium term, growth is expected to average 1.8%, with investment improving as reforms address electricity and logistics bottlenecks (IMF).

South Africa's public finances have deteriorated significantly over the past 15 years. Since the Global Financial Crisis (GFC), fiscal deficits have averaged over 4% of GDP, driven by rising wage costs, social transfers, and support for state-owned enterprises (SOEs). Despite some consolidation efforts before the pandemic, including tax increases and a spending rule, revenues fell short of expectations while public spending continued to rise, pushing public debt from 25% to 74% of GDP from FY08-23. The pandemic further strained public finances. Rising debt, tight financing conditions, and the loss of investment grade have increased interest payments to nearly 20% of revenues, limiting funds for other priority spending, including investment. In FY23, the deficit reached 5.9% of GDP, 2 percentage points higher than the previous year, due to lower tax revenues (mainly from corporate income taxes) and higher spending (especially on debt service and support for Eskom, the electricity SOE). As a result, the primary balance showed a deficit of 0.8% of GDP, down from a surplus of 0.7% in FY22 (data IMF). For 2025, the primary deficit should increase to 1% of GDP, before turning positive in 2026 (+0.3%). With general fiscal deficits expected to remain high in the medium term, public debt is projected to rise from 75.7% in 2024 to 80.1% by 2026 (IMF data). In 2024, banks maintained strong capitalization with a capital adequacy ratio (CAR) of 17.1% and liquidity with a liquidity coverage ratio (LCR) of 146.3%. Profitability remained stable, with a return on equity (ROE) ratio of 15.6%, despite non-performing loans (NPLs) reaching 5.2% of total loans, above pre-pandemic levels. NPLs are covered by standard IFRS provisions. Inflation slowed from 5.9% in 2023 to an average of 4.6% in the first eleven months of 2024, driven by lower fuel and food prices. For 2025, the IMF expects inflation to decrease to 4%.

Unemployment fell to 32.1% in Q3 2024, as employment growth picked up. However, youth unemployment remains high at 60.2%, and 8.1% of the working-age population is classified as discouraged from work (NEET – data IMF). The lack of job opportunities continues to drive high inequality in South Africa, although average nominal wages and salaries kept pace with inflation in Q3 2024. according to the latest data available from the World Bank, around 55.5% of the population lives below the national upper poverty line. The IMF estimated the average GDP per capita (PPP) at USD 16,009 in 2024.

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