SOUTH AFRICA
Table 1

2023

Population, million

60.5

GDP, current US$ billion

378.0

GDP per capita, current US$6248.5

International poverty rate ($2.15)

a20.5
a40.0

a61.6

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

a63.0

School enrollment, primary (% gross)

b98.1

b62.3

Total GHG emissions (mtCO2e)

580.1

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ Most recent WDI value (2021).

South Africa’s economic growth slowed to0.6 percent in 2023, undermined by constraints on products and input markets
and a broad-based decline in public service delivery (electricity supply, transportand logistics, public safety). As this weakgrowth trailed population growth, percapita income contracted by 0.4 percent.
The unemployment rate remains above 30
percent amid limited labor demand.
Ahead of general elections in May, the2024 Budget further extended social support introduced during the pandemic
while maintaining plans to stabilize debt.

Key conditions andchallenges
South Africa’s economy remains crippled
by multiple structural constraints, including electricity shortages, transport bottlenecks (ports and freight rail), and a highcrime rate. Reforms to address them continue to advance at a slow pace due todeclining state implementation capacity
and a lack of political consensus. Socialindicators remain dismal. Poverty is high– estimated at 62.7 percent in 2023 whenusing the upper-middle-income poverty
line – and inequality remains among thehighest in the world. Progress on extending access to basic services (such as water, electricity, and refuse collection) isstalling. Vulnerability to hunger has increased since the COVID-19 pandemic.
An estimated 12.9 percent of the population was at risk of hunger in 2022, despite the expansion of social grants.
In the absence of structural reforms, theimpact of fiscal policy on output (the fiscal multiplier) has been low and declining, reflecting inefficiencies in the allocation of resources and deteriorating state
capacity. Social spending has mitigated hardship, but weak job creation has
hampered progress in reducing poverty.
Higher public sector wages and transfers
to poorly performing state-owned enterprises have crowded out public investment, contributing to the erosion of thecountry’s public capital stock. Monetary
policy is sound, credible, and consistent

FIGURE 1 South Africa / Government financing

with the South African Reserve Bank’s
price stability mandate.
The political economy is complex.
Amid growing discontent with economic prospects and dismal public
service delivery, the African National
Congress (ANC) is set to face highly
contested general elections this year.
Hence, there is uncertainty around theeconomic policies the new government
will prioritize.

Recent developments
Real GDP growth slowed from 1.9 percent in 2022 to 0.6 percent in 2023. On
the spending side, private investment
in alternative energy supported growth,
but a drawdown on inventories andweak net export performance had a negative impact on growth. Domestic consumption remained constrained by poor
labor market outcomes and fiscal expenditure restraint. On the sectoral side,mining and manufacturing were affected by power outages and transport bottlenecks. The services sectors performed
better. Extreme weather events, including floods, severe storms, and droughts
in several provinces negatively affected
agricultural output and had significant
human and social costs.
The unemployment rate averaged 32.4
percent in 2023, with the rate for those
aged 15-34 at 44.9 percent. Even thoughmore jobs were created in 2023 – about
790,000 jobs – the pace of job creation is
not keeping up with the growing labor

FIGURE 2 South Africa / Actual and projected poverty rates
and real GDP per capita
Poverty rate (%)

Real GDP per capita (constant LCU)

7082000

6080000

5078000

40760003074000

2072000

100700002008 2010 2012 2014 2016 2018 2020 2022 2024 2026

Sources: National Treasury and World Bank.

International poverty rate

Lower middle-income pov. rate

Upper middle-income pov. rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

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force, resulting in rising numbers of unemployed people.
Consumer inflation, supported by soundmonetary policy and lower global commodity prices, declined from 6.9 percent
in 2022 to 6.0 percent in 2023. The South
African Reserve Bank left the key interest rate unchanged at 8.25 percent
since May 2023. Yet, high food and fuel prices disproportionately affected themost vulnerable people: the poorest 20
percent of households faced an inflation
rate of 9.3 percent.
The current account deficit widened from
0.5 percent of GDP in 2022 to 1.6 percent
of GDP in 2023, due to deteriorating
terms of trade (-4.8 percent in 2023),
and logistics constraints on exports. Lower global commodity prices for South
Africa’s key exports contributed to weaker fiscal revenue and, together with risingdebt-service payments and persistent
spending pressures, negatively impacted fiscal outcomes. The fiscal deficit
reached an estimated 6 percent of GDP
in 2023/24, and public debt reachedan estimated 73.9 percent of GDP overthe same period.

Outlook
Persistent structural constraints limit
South Africa’s economic potential. RealGDP growth is projected to average 1.3
percent over 2024-26, as energy sector reforms are expected to improve electricity
supply gradually. To accelerate the growthtrajectory, broad-based reforms and faster
implementation are urgently needed.
Inflation is expected to continue to decline,
easing the cost-of-living pressures onhouseholds. The labor market is expected
to remain weak, driven by subdued private sector activity, skills mismatches, andcumbersome labor regulations. This willtranslate into unemployment rates in theorder of 32 percent over 2024-26. The weaklabor market will continue to weigh on
households’ consumption and progress onsocial outcomes. The upper-middle-income poverty rate is projected to remain
high, at 62.5 percent in 2026.
Less favorable terms of trade and persistent transport bottlenecks are expected toweigh on external balances. The currentTABLE 2 South Africa / Macro poverty outlook indicators

account deficit is expected to widen to
2.8 percent of GDP in 2024 and to 3 percent of GDP by 2026. Nonetheless, it isprojected to remain financed by foreign
capital inflows.
The fiscal trajectory is projected to improve gradually over the medium term.
However, spending allocations remaintilted toward current expenditure. Public
capital spending is projected below 3 percent of GDP over 2024-26 due to limited
fiscal space. The government is planningto draw down about US$8 billion fromthe Gold and Foreign Exchange Contingency Reserve Account (GFECRA) – anaccount at the central bank recording foreign exchange valuation changes inrand–over the next three years to reduceits borrowing requirements, which is expected to translate into slower debt accumulation. Public debt is projected toreach about 78 percent of GDP in 2026.
However, pressures on public wages andstate-owned enterprises, the extension of
the COVID-19 social relief of distressgrant, persistently high interest rates, andhigh risks to growth and revenue could
put fiscal consolidation at risk.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
4.7
5.8
0.5
0.6
9.1
9.6

2022
1.9
2.5
1.0
4.8
7.4
14.9

2023e
0.6
0.7
2.1
4.2
3.5
4.1

2024f
1.2
1.4
-0.8
4.2
2.2
3.8

2025f
1.3
1.4
-0.3
4.0
2.5
3.0

2026f
1.5
1.4
-0.4
4.0
3.0
3.0

Real GDP growth, at constant factor prices
Agriculture
IndustryServices

4.4
7.4
6.2
3.8

1.9
0.9
-2.5
3.4

0.6
-12.2
-0.1
1.3

1.2
12.7
0.3
1.1

1.3
2.0
1.1
1.3

1.5
2.0
1.6
1.4

Inflation (consumer price index)

4.5

6.9

6.0

4.9

4.5

4.5

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

3.7
9.7

-0.5
1.6

-1.6
2.0

-2.8
1.5

-3.0
1.5

-3.0
1.5

-4.6
27.8
67.8
-0.4

-3.6
28.2
70.9
0.9

-6.0
27.3
73.9
-1.0

-5.9
27.3
74.5
-0.6

-6.027.3
76.9
-0.6

-4.5
27.4
78.0
1.1

21.7
41.4
62.8

21.5
41.1
62.6

21.5
41.1
62.7

21.5
41.1
62.6

21.4
41.1
62.6

21.4
40.9
62.5

3.2
78.3

3.7
78.8

-1.1
78.4

0.7
78.4

1.0
78.4

1.4
78.4

a

Fiscal balance (% of GDP)
Revenues (% of GDP)
Debt (% of GDP)
Primary balance (% of GDP)b,cInternational poverty rate ($2.15 in 2017 PPP)b,cLower middle-income poverty rate ($3.65 in 2017 PPP)b,cUpper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ The Eskom debt-relief arrangement is reported above the line, in expenditures.
b/ Calculations based on 2014-LCS. Actual data: 2014. Nowcast: 2015-2023. Forecasts are from 2024 to 2026.
c/ Projection using neutral distribution (2014) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

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