The economy was buoyed by the run up in global commodity prices but drought, a correction in commodity prices and the political uncertainty have stymied growth. The mining sector has suffered from growing resource nationalism. Ongoing uncertainty, combined with volatile commodity prices, have deterred investment and seen over 55,000 mining jobs shed over the past three years.
The resignation of President Jacob Zuma in early 2018 and the handover of power to Cyril Ramaphosa, who is focused on stimulating economy and improving policy certainty, is a positive development. But issues around land reform (the ruling African National Congress (ANC) voted in favour of expropriation without compensation in December), labour laws and income inequality will likely continue to frustrate investment.
The future is buoyed by favourable demographics as South Africa’s youthful population and regional importance bode well for the long term outlook. Still, large external imbalances, lack of critical infrastructure, heavy reliance on commodities and a history of race based policies pose downside risks.