Key considerations Economic recovery Against the backdrop of a deep recession in 2020, South Africa is experiencing only a mild recovery, measured against other emerging nations. Growth is forecast to resume at 3% in 2021, lower than the OECD average of 3.30% and the Brics group – Brazil, Russia, India and South Africa – average of 6.70%. Economic expansion will plateau at about 2% in 2022 – well below what is needed to aid job creation (Minsat, 2021). Owing to the combined effect of the 7% contraction in 2020 and lingering structural constraints to growth, South Africa’s real gross domestic product (GDP) is not expected to return to prepandemic levels before the latter part of 2023 (National Treasury, 2021). A global economic rebound of 5.60% in 2021 and 4% in 2022 presents an opportunity for South Africa to “ride the global wave” of recovery (OECD, 2021). However, as a relatively small economy with a pre-Covid GDP of $351.40-billion, global integration will be key to taking advantage of opportunities that may emerge. Thus far, South Africa’s exports have failed to follow the ‘V-shape’ recovery of foreign demand, which highlights a potential issue with their competitiveness. There is, however, an opportunity to capitalise on intra-African exports. Further, South Africa is among a few economies that have not achieved much in terms of economic prosperity in the past ten years and has been urged not to repeat the failures of the “lost decade”. Originally coined to refer to Japan between 1991 and 2000 – a time when the economy collapsed, stock markets crashed, and unemployment and debt soared – the term has come to be applied to a wider range of economies that experienced sustained periods of low, or negative, growth rates owing to political and economic policy failures. For example, warnings were issued by US President Barack Obama that the US risked a lost decade in the wake of the Great Recession of 2007-2009 (Meckler, 2009). In the South African context, President Cyril Ramaphosa in January 2019, spoke about South Africa’s “nine lost years” resulting from the State capture and related corrupt practices that gripped the country from 2009 to 2018. While the per-capita GDP of many other developing nations accelerated, South Africa’s stagnated and now reflects the same level as 2006. Had the country managed to replicate its pre-global financial crisis growth over the past ten years, its per-capita GDP would have been R65 000, compared with the current R50 000 (Fengler, 2021).
Deindustrialisation and productivity South Africa has suffered a major deindustrialisation pattern in the past three decades. Manufacturing as a percentage of GDP has declined from 21.60% of GDP in 1990, to less than 12% in 2019 (World Bank, 2021). Although certain sectors are performing well, most notably automotive, the overall industry has been underperforming by global standards. This analysis
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