South Africa: an overview

South Africans waving a flag before the 2010 World Cup. Credit: Getty Images

South Africa is a middle-income emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy and transport sectors; a stock exchange that is the 18th-largest in the world; and modern infrastructure that supports relatively efficient distribution of goods to major urban centres throughout the Southern African region.

At the end of 2007, South Africa began to suffer from severe energy shortages. The state electricity supplier, Eskom, faced problems with aged power plants, forcing it to introduce “load-shedding”, or cuts to electricity, for residents and businesses in the biggest cities. Growth was robust from 2004 to early 2007 as the country reaped the benefits of macroeconomic stability and a global commodities boom, but began to slow in the second half of 2007 due to the electricity crisis and the subsequent impact of the global financial crash on commodity prices and demand. GDP fell nearly 2 per cent in 2009.

Daunting problems from the apartheid era remain — especially poverty, lack of economic empowerment among disadvantaged groups and a dearth of public transportation. South Africa’s past economic policy was fiscally conservative, focusing on controlling inflation and attaining a budget surplus. The current government largely follows the same prudent lines, but has to contend with the impact of the global crisis. It also faces growing pressure from special interest groups to use state-owned enterprises to deliver basic services to low-income areas and to increase job growth.