South Africa - Economy

Economy

South Africa has a mixed economy with a high rate of poverty and low GDP per capita. Unemployment is high and South Africa is ranked in the top 10 countries in the world for income inequality, measured by the Gini coefficient. Unlike most of the world's poor countries, South Africa does not have a thriving informal economy; according to OECD estimates, only 15 per cent of South African jobs are in the shadow economy, compared with around half in Brazil and India and nearly three-quarters in Indonesia. The OECD attributes this difference to South Africa's widespread welfare system. World Bank research shows that South Africa has one of the widest gaps between per capita GNP versus its Human Development Index ranking, with only Botswana showing a larger gap.

After 1994 government policy brought down inflation, stabilised public finances, and some foreign capital was attracted, however growth was still subpar. From 2004 onward economic growth picked up significantly; both employment and capital formation increased.

South Africa is a popular tourist destination, and a substantial amount of revenue comes from tourism. Illegal immigrants are involved in informal trading. Many immigrants to South Africa continue to live in poor conditions, and the immigration policy has become increasingly restrictive since 1994.

Principal international trading partners of South Africa—besides other African countries—include Germany, the United States, China, Japan, the United Kingdom and Spain.

The South African agricultural industry contributes around 10% of formal employment, relatively low compared to other parts of Africa, as well as providing work for casual labourers and contributing around 2.6 per cent of GDP for the nation. Due to the aridity of the land, only 13.5 per cent can be used for crop production, and only 3 per cent is considered high potential land.