SOUTH Africa recorded a gross domestic product (GDP) per capita of $13 243 (R253 689) in 2023, the World Economic Forum (WEF) said yesterday, highlighting the country’s low scores in economic inclusiveness, resilience and sustainability.
The WEF said inequality was a major contributor to lower per capita productivity in South Africa, Lesotho, Botswana and Eswatini.
The WEF said in its new report, The Future of Growth Report 2024: “As much as 20% of overall inequality in Botswana, Eswatini, Lesotho and South Africa can be attributed to location, gender, age and parental background, with the figure reaching almost 50% when race factors are considered.”
For South Africa, per capita GDP has been on the decline, decreasing by as much as 0.6% over the past five years.
The report also shows average GDP growth of 0.8% between 2018 and 2023. The World Bank, however, shows South Africa’s GDP per capita growth at $6 766 for 2022.
Since the 2007 global financial crisis, global economic growth has lost momentum. On average, global short-term GDP growth has declined from about 2% in advanced and 5.8% in emerging and developing economies in the early 2000s to about 1.4% and 1.7%, respectively, in the post Covid-19 pandemic period.
In terms of economic inclusiveness, the WEF report apportions South Africa a score of 52.8 out of 100 while the sustainability score at 47.5%. South Africa’s economic resilience was calculated at 48.7 out of 100 while the economic innovativeness index puts the country at 44.1%.
Although Statistics South Africa said it did “not calculate nor publish” GDP per capita, economists said various economic headwinds were buffeting South Africa’s per capita productivity. They said precarious employment, lay-offs and the impact of power outages as well as other logistical bottlenecks were impacting productivity.
According to analysts at the Economist Intelligence Unit (EIU), President Cyril Ramaphosa, who faces a re-election hurdle amid waning popularity this year, would likely expedite reforms, including measures to boost power supply and fight corruption. This would likely give a boost to productivity which was impacted by worse load-shedding from Eskom last year.
The EIU explains in a note on South Africa: “The government will remain focused on structural reforms to alleviate growth-inhibiting electricity shortages and transport bottlenecks, in partnership with the private sector. Growth will quicken in 2024, after a disappointing 2023, as serious electricity shortages start to ease, but the global backdrop will remain tough.”
Overall economic growth in South Africa had already weakened in 2023 to 0.7%, according to World Bank data. It said this was a reflection of “structural constraints, especially the energy crisis and transport bottlenecks, and weaker demand in a context of weak job creation, high prices and monetary policy tightening.
Nonetheless, a slight uptick is projected for 2024, with GDP growth seen at 1.3% before edging up to 1.5% next year.
The World Bank, however, underscored that while energy sector reforms are expected to improve energy availability in the medium term, the increasingly prevalent infrastructure bottlenecks, worsened by slow-paced structural reforms, will likely continue to limit the country’s growth and productivity potential.
Constrained rail and port capacity are expected to weigh on export performance.”
Nicholas Shaxson, an economist with the Balanced Economy Project, said yesterday that South Africa, which has some of the best competition laws that contains progressive ideas, was making a push towards creating greater economic participation by historically disadvantaged persons as part of considerations in merger decisions.
“However, these positive steps are hampered where there are high levels of corporate concentration and barriers of entry to markets. Enforcement has been difficult in light of powerful forces opposing change, which is no small concern in a country facing extreme levels of racialised concentration,” noted Shaxson.