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The South African economy continues to recover from the effects of the COVID-19 pandemic, albeit more slowly than expected, with growth estimated at 1.9% in 2022. Employment growth picked up in the first half of 2022, but the labor market situation remains challenging. Poverty has reached levels not seen for more than a decade, while inflation has increased to a 13-year high. The outlook is clouded with risks, and sustained reforms and investments are required to support better growth outcomes and poverty reduction.

The South African economy was already in a weak position when it entered the pandemic after a decade of low growth, expanding only by an average 1% percent between 2012 and 2021, leading to a contraction of income per capita of 5.6% during this period. Longstanding structural constraints, such as electricity shortages, continue to be binding. Important steps were taken in 2021 towards addressing structural hurdles to growth over the medium term, including an increase in the licensing threshold for embedded electricity generation. Commodity prices remain important for South Africa, a major net exporter of minerals and net importer of oil. Strengthening investment, including foreign direct investment, will be critical to propelling growth and create jobs.

Key Development Challenges

South Africa has taken considerable strides to improve the wellbeing of its citizens since its transition to democracy in the mid-1990s, but progress has stagnated in the last decade. The percentage of the population living below the upper-middle-income-country poverty line fell from 68% to 56% between 2005 and 2010 but has since trended slightly upwards, to 57% in 2015, and is projected to have reached 60% in 2020.

Structural challenges and weak growth have undermined progress in reducing poverty, heightened by the COVID-19 pandemic. The achievement of progress in household welfare is severely constrained by rising unemployment, which reached an unprecedented 35.3% in the fourth quarter of 2021. The unemployment rate is highest among youths aged between 15 and 24, at around 66.5%.

South Africa remains a dual economy with one of the highest and most persistent inequality rates in the world, with a consumption expenditure Gini coefficient of 0.67 in 2018. High inequality is perpetuated by a legacy of exclusion and the nature of economic growth, which is not pro-poor and does not generate sufficient jobs. Inequality in wealth is even higher, and intergenerational mobility is low, meaning inequalities are passed down from generation to generation with little change over time.

Last Updated: Oct 06, 2022

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South Africa: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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Additional Resources

Country Office Contacts

Main Office Contact
Postal Address
P.O. Box 12629
Hatfield, 0028
Pretoria, South Africa
+27 (0)12 742 3100
For general information and inquiries
Lavinia Engelbrecht
Sr. External Affairs Officer
+27 73 267 6073
For project-related issues and complaints