Country Profile South Africa

South Africa

Jump to a section of the page

South Africa

Last updated: January 2024

South Africa’s economy is supported by mining, manufacturing, exports and tourism. But growth significantly lags the African regional average because of ongoing socioeconomic challenges, political tensions and fiscal and external liquidity constraints. South Africa outperforms most regional peers on measures of per capita income, creditworthiness and business climate.


The above chart is a cobweb diagram showing how a country measures up on four important dimensions of economic performance—per capita income, annual GDP growth, business climate rank and creditworthiness. Per capita income is in current US dollars. Annual GDP growth is the five-year average forecast between 2024 and 2028. Business climate is measured by the World Bank’s 2019 Ease of Doing Business ranking of 190 countries. Creditworthiness attempts to measure a country's ability to honour its external debt obligations and is measured by its OECD country credit risk rating. The chart shows not only how a country performs on the four dimensions, but how it measures up against other countries in the region.

Economic outlook

Real GDP grew by 0.9% in 2023, slower than 1.9% in 2022. Growth weakened as a result of subdued household expenditure and business confidence on the back of high interest rates, cost of living pressures, high household debt and policy uncertainty. Challenges in the manufacturing and mining sector remained persistent due to electricity supply shortages, weaker freight and logistics capacity and ailing infrastructure. Sluggish economic growth continues to weigh on the labour market; the unemployment rate remained very high at 32.6% in the second quarter of 2023.

The IMF expects growth to accelerate to 1.8% in 2024, helped by greater investment in energy generation that helps alleviate pressure on cuts to power supply. Further recovery in international travel is likely to boost demand for South African tourism. On the downside, exports are likely to remain weak amid slow global demand. Private consumption is similarly likely to remain constrained because of still-high inflation. Amid elevated public debt, fiscal consolidation will remain a key priority for the government, limiting public consumption and investment. 

Risks to the outlook include prolonged electricity shortages, subdued global economic activity and persistent high inflation that could result in further tightening of monetary policy. Dry weather conditions may also hurt crop yields and raise domestic food inflation. High public debt leaves South Africa vulnerable to economic and climate shocks.
South Africa’s young population and location bode well for the long-term outlook. South Africa has better infrastructure than most other African countries. Moreover, the government has advanced several reforms, including to combat corruption, promote medium-term growth and consolidate public finances. But long-standing economic and financial constraints, including large external imbalances, high public debt, intermittent energy supply, elevated social tensions and heavy reliance on commodities are all likely to keep growth below 2% per annum in the medium term.


South African per capita income rose significantly during the global commodity price and investment boom in the 2000s. But incomes have fallen steadily since 2012 amid weak GDP growth and high unemployment. In the longer term, rising poverty and high youth unemployment remain a challenge to addressing economic and social disparities. Moreover, deterioration in real wage growth—as nominal wages grow slower than the inflation rate—is a significant challenge to improving living standards. In this regard, the government’s National Development Plan aims, among other things, to reduce inequality and raise living standards.


Country risk

Country risk in South Africa is moderate. The OECD country credit grade is 4, akin to a sub-investment grade sovereign rating. This indicates a moderate likelihood that South Africa will be unable and/or unwilling to meet its external debt obligations. South Africa’s high government debt, persistent low GDP growth and income inequality continues to complicate fiscal consolidation efforts and constrains overall creditworthiness.


The risk of expropriation is broadly in line with South Africa’s overall country risk rating. The US investment climate statements identify existing laws that entitle the government to expropriate private property for reasons of public necessity or utility. At present, investors have the right to receive compensation following expropriation. The government continues to consider a policy to allow for the expropriation of land, though its implementation remains uncertain.

Expropriation Risk

South Africa scores in the top half of countries on both rule of law and voice and accountability. Moreover, governance scores are above regional peers on all measures, except for political stability and absence of violence. Political risk reflects public discontent around increasing economic hardship, energy shortages and public sector corruption that threatens governance and institutional strength.

Political Risk

Bilateral relations

South Africa was Australia’s 33rd largest trading partner in 2022. Total goods and services trade amounted to about $3.9 billion in 2022, or 0.3% of Australia’s bilateral trading relationship. Australia’s main exports to South Africa in 2022 were aluminium ores (including alumina), coal, wheat, and precious metals and specialised machinery and parts. Major Australian imports included goods and passenger motor vehicles, defence items and vehicle parts and accessories.


South African student enrolments in Australia have recovered in line with the broader education sector recovery over the past couple of years. South African tourism arrivals in Australia rose further in 2023, but remain below pre-pandemic levels. A competitive Australian dollar and another year of recovery in international travel should support further demand for Australian tourism, and broader services exports in 2024. 


South Africa is Australia’s most significant investment partner in the Sub-Saharan African region. South Africa is a considerable investor in Australia, particularly in the agriculture sector. For example, Safika Holdings invested in Brisbane Valley Protein—its first Australian agricultural investment—in 2019. Australian investment in South Africa is focused in the resources sector. Rio Tinto, South32, MC Mining and MRC Australia all have active mining operations, and Orion Minerals and Theta Gold have active exploration projects. South Africa’s mineral exploration target of US$900 million in annual investments helps attract inward foreign investment.