South Africa faces low growth, widespread unemployment, and a high reliance on foreign capital inflows.
This is the finding made by the IMF who say that the weak global economic outlook is not helping but, South Africa has to move forward with planned structural reforms which will boost growth and create jobs for a growing population.
Since 2009, South Africa’s growth has averaged 3 % compared to 5 % for emerging markets and 4 % for commodity exporters.
Weak growth in South Africa’s main trading partners, in particular Europe, partly explains this.
However, domestic factors played an important role, including labour disruptions or concerns over electricity supply.
The IMF projects growth to slow further to 2 % in 2013 from 2½ % in 2012.
As the global economy recovers and the government’s infrastructure drive bears fruit, South Africa’s growth should pick up to 3–3½ % in the coming years.
At these growth rates, the economy creates jobs, but not enough for the growing labour force and those currently without work.
Unemployment remains stubbornly above 20 %, or more than 30 % when including those who have given up looking for a job.
Youth unemployment is even higher at more than 50 %.
The structural reforms South Africa must successfully implement include:
Improve education outcomes. Many labour market entrants do not have the basic skills sought by potential employers.
Reduce transport costs for workers and job seekers that arise from large physical distances to urban centres and jobs.
Enhance competition in product markets to promote innovation and dynamism—the very source of growth and job creation in other countries.