South Africa's economy faces an uphill battle as growth stagnates

According to the OECD survey economic output grew by 0.7% annually in the past ten years

- ASHLEY LECHMAN

SOUTH Africa's economy remains under significant strain, with gross domestic product (GDP) growth lagging behind population increases over the past decade. According to the OECD Economic Survey: South Africa 2025, economic output grew by a mere 0.7% annually in the past ten years.

This slow pace resulted in stagnating or declining GDP per capita, further deepening the country’s entrenched unemployment and inequality.

The OECD warned that “economic growth has averaged only 0.7% per year over the past decade, below that of the population,” a key factor in the country’s deteriorating living standards.

Public debt, which stood at 31.5% of GDP in 2010, is projected to balloon to 77% by 2025, increasing debt servicing costs and limiting fiscal space for much-needed public investment.

Electricity and infrastructure bottlenecks: dragging growth down

One of the central themes in the OECD's report is the impact of structural constraints on productivity.

“Persistent insufficient access to electricity, and rail and port bottlenecks have weighed on activity, investment, exports and living standards over recent years,” the report noted. In 2023 alone, electricity shortages shaved 1.5 percentage points off GDP growth.

Though 2024 has seen improvements in power availability due to reforms and increased independent renewable energy generation, supply remains unreliable.

The OECD stressed the urgent need to “accelerate renewable electricity generation, expand the transmission grid, and redefine the role of municipalities and Eskom in electricity distribution”.