South Africa Economy

With slow but steady growth in 2013, South Africa saw comparatively reasonable performance last year, although there remains a sense that the resource-rich country is operating below its considerable potential.

The local economy is struggling to overcome twin hurdles – an inflated unemployment rate that siphons off state funding for social services and a lack of skilled workers to fill the many positions that are currently vacant.

The exacerbation of some of South Africa’s more intractable economic weaknesses – including contentious labour relations and tensions and uncertainty within the ruling African National Congress (ANC) – have combined to make 2012 a hugely challenging year for the continent’s largest economy.

South Africa’s economic performance is a mixed bag, depending on what sectors and what indicators are under scrutiny. The country, which accounts for roughly a quarter of Africa’s total GDP, has seen a rise in select industries, a drop in inflation, increased government spending and modest improvements in consumer sentiment, but is still grappling with labour unrest and underwhelming export demand.

The economy is expected to post modest but steady growth in 2012, though to what degree GDP will expand is partly dependent on three key issues: the country’s credit rating, how quickly the government can begin rolling out its high-profile infrastructure programme and how South Africa’s major export markets fare over the next 12 months.

Having posted mixed results in 2011, South Africa’s economy was buoyed by rising demand for commodities and solid growth at home, while continued high unemployment, concerns over the European debt crisis and a slowdown in many of the country’s main trading markets saw a pessimistic close to the year.