South Africa's GDP

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South Africa's Economy

South Africa is a significant developed country on the African continent. The country has a competitive advantage in the mining, agricultural, and manufacturing sectors, which all contribute significantly to GDP. The country's economy has changed from primary and secondary to tertiary, which accounts for around 65% of the nation's GDP (Philip, 2015). The country's unemployment rate is around 25%, while social issues like crime and poverty drag down the economy and slow the country's growth pace. The recovery from the 2008-2009 global financial crisis has resulted in increased public and private consumption, as well as increased export and import volumes.

South Africa's Infrastructure and Resources

South Africa is a middle-income nation that is profoundly endowed with natural resources. Its infrastructural sector is fully developed and thus providing sufficient and efficient product distribution in the southern part of the continent. Furthermore, the nation has a well-established legal, financial, communication system, energy, and stock exchange rate which is among the top 20 leading stock exchange globally. The primary sector of the nation is majorly based on the agriculture, mining and manufacturing sector and an increase in the GDP owes to the global commodities boom and the nation’s stability. The average real GDP growth rate in 1994 was 3%, and according to World Bank (2015), the average standard of living that is reflected in the real GDP, and per capita income has increased by 33% since 1994. Since 2004-2008, the nation has registered an increase in economic growth rate and higher GDP levels. However, in 2007 to 2009, the GDP growth rate dropped due to the global financial crisis. In 2007, the GDP growth rate was 5.1% which fell to 3.1% in 2008 and further dropped to 2% in 2009. In 2010, GD grew by 2.8%, and in 2011 it recorded a GDP of 3.1%.

Influence of Foreign Direct Investment

During the financial crisis period, daunting economic challenges such as unemployment, lack of economic empowerment and poverty strongly damaged the economy. The huge potential aspect of foreign direct investment in the country is a huge propeller of the growth in GDP. Foreign direct investment in the country has offered development in the infrastructure and fueled the development of the vital markets in the economy such as production (World Bank, 2015). The growth in GDP of the nation provides an indication of the growth in its sectors. In 2014, South Africa faced a strike in the platinum sector which lasted for five months, and the economy grew by only 1.5% as opposed to that tabled in 2013 which was 2.2%. The 2014 GDP growth was similar to that of 2009 which was also 1.5% (Trading Economics, 2016).

Trade Performance and GDP

The reasons attributed to the growth in the GDP level are engrossed in the economic and financial trade performance. In 1991 to 1998, the country documented a 65% increase in the volume of imports and exports. The trade performance of the nation has significantly increased since 1998 to 2016 and the level of the imports and exports rapidly increased. Nevertheless, the significant growing gap in the volume of exports and imports result in the trade deficit. The nation’s trading activities on the foreign market are accelerated by domination in the mining whose exports are taken to Asia and mineral exports to China. The quest for value addition and sophistication in the consumer and electric products have also seen an increase in its GDP level. The service sector also provides a key pillar to the nation’s GD and economic growth.

Contributors to GDP

The GDP equation is given by GDP= C+ I+ G+ (E-M). According to Trading Economics (2016), household consumption spending contributed 59% of the GDP, and the government expenditure provides for 22% of the GDP. 12% is provided by the investment and the largest contributors on the production side is done by the financial services which are 1.0%. Trade and manufacturing sector accounts for 0.5% of GDP, 0.48% contributed by the transport sector while the electricity and the agriculture both take 0.05%. Mining section takes 0.3%, and the cell phone industry mostly adds to the communication and the transportation sector and thus having a positive influence on GDP level. The Gini coefficient used in the measurement of inequality ranges between 0.6 to 0.7 in South Africa and thus implying that the nation has high levels of unequal income distribution (Philip, 2015). The property, financial and the business sectors have massively benefited from the technological development and aided to the performance of the economy and the GDP level. The South African 2030 National Development Plan (NDP) formulated in 2012 aim at doubling the level of GDP by 2030 and mitigating poverty and decrease inequalities in income distribution evident in the nation.


Indeed, the 2030 National Development Plan (NDP) is the road map to growth in the GPD level and the economic growth. The country has to align its developmental objectives along with the goals of the private sector in the realization of higher profits that will significantly add to its GDP. Despite the few challenges experienced in the nation, South Africa is well positioned at realizing higher growth levels in GDP that will sustain the economy and eliminated the problems. The fundamental aspect is to ensure that there is progress that aims at widening and deepening the industrial development and thus accelerate the economic growth.


Philip Mohr. (2015). Economics for South African students.5th edition. Van Schaik Publishers.

Trading Economics. (2016). South Africa GDP Annual Growth Rate | 1994-2015 | Data | Chart | Calendar. 2015. South Africa GDP Annual Growth Rate | 1994-2015 | Data | Chart | Calendar. Retrieved on June 3, 2017, from

World Bank. (2015). South Africa Overview. Retrieved on June 3, 2017, from

May 17, 2023

World Economics



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