According to Trading Economics global macro models and analysts, South Africa’s GDP is predicted to reach 320.00 USD billion by the end of 2021. According to our econometric models, the GDP of South Africa is expected to trend around 345.00 USD billion in 2022.
What is the current state of GDP?
Retail and wholesale trade industries led the increase in private inventory investment. The largest contributor to retail was inventory investment by automobile dealers. Increases in both products and services contributed to the increase in exports. Consumer products, industrial supplies and materials, and foods, feeds, and beverages were the biggest contributions to the growth in goods exports. Travel was the driving force behind the increase in service exports. The rise in PCE was mostly due to an increase in services, with health care, recreation, and transportation accounting for the majority of the increase. The increase in nonresidential fixed investment was mostly due to a rise in intellectual property items, which was partially offset by a drop in structures.
The reduction in federal spending was mostly due to lower defense spending on intermediate goods and services. State and local government spending fell as a result of lower consumption (driven by state and local government employee remuneration, particularly education) and gross investment (led by new educational structures). The rise in imports was mostly due to a rise in goods (led by non-food and non-automotive consumer goods, as well as capital goods).
After gaining 2.3 percent in the third quarter, real GDP increased by 6.9% in the fourth quarter. The fourth-quarter increase in real GDP was primarily due to an increase in exports, as well as increases in private inventory investment and PCE, as well as smaller decreases in residential fixed investment and federal government spending, which were partially offset by a decrease in state and local government spending. Imports have increased.
In the fourth quarter, current dollar GDP climbed 14.3% on an annual basis, or $790.1 billion, to $23.99 trillion. GDP climbed by 8.4%, or $461.3 billion, in the third quarter (table 1 and table 3).
In the fourth quarter, the price index for gross domestic purchases climbed 6.9%, compared to 5.6 percent in the third quarter (table 4). The PCE price index climbed by 6.5 percent, compared to a 5.3 percent gain in the previous quarter. The PCE price index grew 4.9 percent excluding food and energy expenses, compared to 4.6 percent overall.
Personal Income
In the fourth quarter, current-dollar personal income climbed by $106.3 billion, compared to $127.9 billion in the third quarter. Increases in compensation (driven by private earnings and salaries), personal income receipts on assets, and rental income partially offset a decline in personal current transfer receipts (particularly, government social assistance) (table 8). Following the end of pandemic-related unemployment programs, the fall in government social benefits was more than offset by a decrease in unemployment insurance.
In the fourth quarter, disposable personal income grew $14.1 billion, or 0.3 percent, compared to $36.7 billion, or 0.8 percent, in the third quarter. Real disposable personal income fell 5.8%, compared to a 4.3 percent drop in the previous quarter.
In the fourth quarter, personal savings totaled $1.34 trillion, compared to $1.72 trillion in the third quarter. In the fourth quarter, the personal saving rate (savings as a percentage of disposable personal income) was 7.4 percent, down from 9.5 percent in the third quarter.
GDP for 2021
In 2021, real GDP climbed 5.7 percent (from the 2020 annual level to the 2021 annual level), compared to a 3.4 percent fall in 2020. (table 1). In 2021, all major subcomponents of real GDP increased, led by PCE, nonresidential fixed investment, exports, residential fixed investment, and private inventory investment. Imports have risen (table 2).
PCE increased as both products and services increased in value. “Other” nondurable items (including games and toys as well as medications), apparel and footwear, and recreational goods and automobiles were the major contributors within goods. Food services and accommodations, as well as health care, were the most significant contributors to services. Increases in equipment (dominated by information processing equipment) and intellectual property items (driven by software as well as research and development) partially offset a reduction in structures in nonresidential fixed investment (widespread across most categories). The rise in exports was due to an increase in products (mostly non-automotive capital goods), which was somewhat offset by a drop in services (led by travel as well as royalties and license fees). The increase in residential fixed investment was primarily due to the development of new single-family homes. An increase in wholesale commerce led to an increase in private inventory investment (mainly in durable goods industries).
In 2021, current-dollar GDP expanded by 10.0 percent, or $2.10 trillion, to $22.99 trillion, compared to 2.2 percent, or $478.9 billion, in 2020. (tables 1 and 3).
In 2021, the price index for gross domestic purchases climbed by 3.9 percent, compared to 1.2 percent in 2020. (table 4). Similarly, the PCE price index grew 3.9 percent, compared to 1.2 percent in the previous quarter. The PCE price index climbed 3.3 percent excluding food and energy expenses, compared to 1.4 percent overall.
Real GDP rose 5.5 percent from the fourth quarter of 2020 to the fourth quarter of 2021 (table 6), compared to a 2.3 percent fall from the fourth quarter of 2019 to the fourth quarter of 2020.
From the fourth quarter of 2020 to the fourth quarter of 2021, the price index for gross domestic purchases grew 5.5 percent, compared to 1.4 percent from the fourth quarter of 2019 to the fourth quarter of 2020. The PCE price index climbed by 5.5 percent, compared to 1.2 percent for the year. The PCE price index increased 4.6 percent excluding food and energy, compared to 1.4 percent overall.
Source Data for the Advance Estimate
A Technical Note that is issued with the news release on BEA’s website contains information on the source data and major assumptions utilized in the advance estimate. Each version comes with a thorough “Key Source Data and Assumptions” file. Refer to the “Additional Details” section below for information on GDP updates.
What is South Africa’s debt to China?
China owes South Africa an estimated 4% of its annual gross domestic product. China provided many tranches of loans to the country, some of which have generated worries about opaque terms and potential corruption linkages. This includes a contentious $2.5 billion loan from the China Development Bank to South Africa’s state-owned power firm Eskom, which was secured during the Jacob Zuma administration. The Zondo Commission of Inquiry into State Corruption found another $2.5 billion loan to Eskom from Huarong Energy (a private Chinese company) to be improper, prompting Eskom chairperson Jabu Mabuza to declare that the company would not repay the loan due to irregularities and corruption in the loan process.
During Cyril Ramaphosa’s presidency, the China Development Bank provided an additional R370 billion ($25.8 billion) loan to support a 2018 economic stimulus package. The loan was initially portrayed as a “gift” by the South African government, and the terms of the loan were not made public, causing controversy. The government justified the loan by claiming that the interest rate was not excessive but that due to a confidentiality clause, it could not be published. The opposition Democratic Alliance said the loan put the country in danger of falling into a “debt trap.”
What accounts for South Africa’s low GDP?
South Africa’s political transformation is regarded as one of the century’s most stunning political achievements. Since 1994, the ruling African National Congress (ANC) has guided policy until August 2016, when the country held the most competitive local government election in its history, in which the ANC lost majority support in four of the country’s main towns. The ANC has been deposed in Pretoria and Nelson Mandela Bay as a result of coalition accords signed by political parties. The most recent general elections were place in May 2019, with the next local government elections set for November 1, 2021.
The COVID-19 (coronavirus) pandemic is having a significant influence on South Africa’s economy, resulting in a 6.4 percent contraction in 2020, as the pandemic weighed hard on both foreign demand and containment efforts implemented by the government. With 2 million people living below the poverty line for upper-middle income countries, based on $5.5 per day in 2011 Purchasing Power Parity exchange rates, PPP, this severe contraction is expected to exacerbate poverty.
After a decade of low development, the South African economy was already in poor shape when the pandemic struck. The economy increased by 0.1 percent in 2019, owing in part to the revival of load shedding due to operational and financial challenges at Eskom, the energy company. The positive global environment (growth of trade partners and commodity prices) will aid South Africa’s economic recovery in 2021. Pre-existing structural impediments, such as electricity shortages, are, nonetheless, still a drag on the medium-term prospects. In 2021, the economy is predicted to increase at a rate of 4.0 percent. Commodity prices will continue to be crucial for South Africa, which is a large net producer of minerals and a net importer of oil. However, boosting investment, notably foreign direct investment, will be critical for accelerating growth and creating jobs.
Since its democratic transition in the mid-1990s, South Africa has achieved significant progress in improving the well-being of its population, but progress has slowed in the last decade. Between 2005 and 2010, the percentage of the population living in poverty in an upper-middle-income country declined from 68 percent to 56 percent, but has since trended slightly upwards to 57 percent in 2015, and is expected to reach 60 percent in 2020.
Progress in eliminating poverty has been hampered by structural problems and insufficient growth, which have been exacerbated by the COVID-19 epidemic. Rising unemployment, which hit an all-time high of 34.4 percent in the second quarter of 2021, is significantly limiting improvements in household welfare. Youths between the ages of 15 and 24 have the greatest unemployment rate, at roughly 64%.
With a consumption expenditure Gini coefficient of 0.63 in 2015, South Africa remains a dual economy with one of the world’s highest and most persistent inequality rates. A legacy of exclusion, as well as the nature of economic growth, which is not pro-poor and does not generate enough jobs, contribute to high inequality. Wealth inequality is much larger, and intergenerational mobility is minimal, implying that inequities are passed down from generation to generation with little change.
What factors influence the South African economy?
Agriculture provided around 2.53% of South Africa’s GDP in 2020, while industry and services contributed 23.42 and 64.57 percent of total value added, respectively.
Is South Africa wealthy or impoverished?
According to the World Bank, South Africa is the world’s most economically unequal country. Since the end of apartheid in 1994, the gap between rich and poor in South Africa has grown significantly, and this inequality is directly tied to racial differences in society.
What is South Africa’s debt to the World Bank in 2021?
From 2002 to 2021, South Africa’s external debt averaged 111469.08 USD million, with a peak of 185357 USD million in the fourth quarter of 2019 and a low of 33262 USD million in the first quarter of 2003.
What African country has the lowest GDP?
Burundi is the poorest country not only in Africa, but also in the world, according to per capita GDP and GNI statistics from 2020. Somalia, Africa’s second poorest country, has the same distinction. In fact, much of the list follows this trend. With the exception of Afghanistan, an Asian country with a GNI per capita of $500, which would put it at #6 on the second list, Africa’s ten poorest countries are statistically the world’s ten poorest. To be honest, this ranking comes with one major caveat: it’s probable that more non-African countries, particularly North Korea, Syria, and/or Yemen, might feature in the bottom ten if they disclosed their GDP/GNI data openly, but they normally don’t. African countries, though, would still account for the majority of the list.
When looking at the data in isolation, it can be difficult to appreciate the magnitude of Africa’s economic issues. To put things in perspective, we might look at the GDP figures of the world’s wealthiest countries. Luxembourg has the greatest GDP per capita (PPP int.$) according to 2020 data, with a value of $118,356more than 150 times more than Burundi’s $771. Similarly, Norway’s world-leading 2020 GNI per capita (Atlas method, current US$) of $78,250 appears modest until one considers that it is 289 times larger than Burundi’s $270. The economic situation in Africa may not always be so dire. Over the last two decades, a few African countries have experienced tremendous economic growth and development. Many Africans may have a more promising economic future if this progress can be sustained and expanded. See the table below for a complete list of African countries and its 2020 GNI per capita (Atlas approach, current US$).