The services sector plays a significant role in the growth and development of the South African economy, contributing an estimated 67.5% of GDP in 2017, followed by industry and agriculture, contributing 23.5% and 4.6% of GDP respectively. Trade in goods and services also plays an important role in South Africa’s economic growth – contributing 58% to GDP in 2017. Much of South Africa’s export earnings are from minerals exports.
The country continues to recover from a setback which started in 2012 due to declining prices for its traditional export commodities, mainly coal, platinum, iron ore and gold, which was worsened by subdued investor confidence, leading to a decline in growth. Growth prospects remained subdued in the medium-term with economic growth estimated at 0,9% in 2017 and projected to reach 1.1% in 2018 and 1.6% in 2019.
Although South Africa’s public debt increased to an estimated 54% of GDP in 2017 from 50.7% in 2016, public debt remains sustainable. On the other hand, inflation declined to 5.1% in September 2017 from a high of 6.8% in December 2016 and is expected to continue falling to an estimated 5.3% in 2019. With strong fiscal discipline, aided by an increase in exports and efforts to reindustrialise the country’s agro-processing, clothing, textile, leather, and footwear (Industrial Policy Action plan), South Africa’s economy holds potential for expansion. Besides, the South African government has identified infrastructure development as a priority for investment, providing a massive potential for business.
Despite South Africa facing the challenges of government accountability, corruption and inadequate education, South Africa provides a reasonably sizeable domestic market. With an estimated population of 56.522 million in 2017 that is expected to grow to about 58.333 million in 2019, a GDP of US$349.299 billion in 2017, which is expected to increase to about US$386.853billion in 2019 and a GDP per capita income of US$6,179.87 in 2017, projected to rise to US$6,631.85 in 2019, South Africa provides a growing market for exporters and investors. The country is also the largest exporter to neighbouring, SADC countries, SACU, COMESA, Africa, and also exports to the UK and the US and is a member of the BRICS.
The country’s volume of imports of goods and services is expected to increase from about 1.88% in 2017 to approximately 3.62% in 2019, and the amount of exports of goods and services is expected to grow from roughly -0.1% in 2017 up to about 3.28% in 2019, indicating expansion in trade.
There is potential for investment in construction, tourism, hotel and catering, and infrastructure development.