South Africa - Economy

Overview: Apartheid left South Africa with unequal distributions of income, distorted patterns of population settlement, imbalances in skills, low productivity and a large and inefficient bureaucracy. Furthermore, in the last decade of the old regime, prolonged recession (from low gold and other commodity prices, high expenditure on security forces, economic sanctions and disinvestment) led to weakening of the economic fabric. GDP grew by 1.0% p.a. 1980–90.

In August 2000, the government announced a programme of privatisation in telecoms, energy and transport, accounting for a substantial part of the state industrial sector.

he large state companies would first be restructured and then privatised. But since this programme was opposed by many government supporters progress was slow.

From the mid-1990s the economy picked up, led by manufacturing, tourism and financial services. It slowed in 1998, then continued to grow steadily from 1999. The government has promoted a programme of black economic empowerment, notably through the Broad Based Black Economic Empowerment Act (2003), which gives previously marginalised groups opportunities that were not available to them in the apartheid era. Strong domestic demand, as a result of rising disposable income and wealth, has driven the good steady growth during the 2000s: 5.1% in 2005, 5.0% in 2006 and 4.8% in 2007, with relatively low inflation.

Trade: Exports of goods and services account for 27% of GDP and manufactured exports for 58% of total merchandise exports (2004). Principal exports are gold, metals, metal products, diamonds, food, drinks, tobacco, machinery and transport equipment; principal imports are machinery, transport equipment, manufactured goods, chemicals and petroleum. Main trading partners for exports and imports are the UK, the USA, Germany, Japan and Italy.

Mining: The country has the world’s largest reserves of gold, manganese, platinum, chromium, andalusite, vanadium and alumino-silicates. It has substantial amounts of iron ore, coal, diamonds, antimony, asbestos, lead, vermiculite, uranium, titanium and zirconium. Mining accounts for 7% of GDP (2005) and, with minerals processing, more than half of export revenues.