An Analysis of South African Economy - 1746 Words

The South African economy is second largest economy in Africa following Nigeria (which recently overtook South Africa according to the Economist) (Mail Guardian, 2014). From the early 2000s, Former President Thabo Mbeki promoted economic growth and foreign investment by relaxing labour laws, increasing the pace of privatisation, and reducing unnecessary governmental spending. His policies faced strong opposition from organised labour. From the mid 2000s, economic growth picked up significantly; both employment and capital formation increased which resulted in South Africa to be considered as an emerging market; formally joining BRICS in 2010 (World Bank, 2014). The policy exhibited over the past few years has resulted in macro stabilization successes and enhanced policy legitimacy. However, the growth and unemployment challenge facing South Africa is significant one. Investment rates are currently low, furthermore the legacy of apartheid is evident in the persistent distortions in a ll factor markets: for labour, as evident in the scale and persistence of unemployment and inadequate investment in human capital; for capital, in the low savings/investment rates (Lewis, 2012). The current challenge that the country faces relates to the problem areas of growth, jobs, and poverty reduction. The high levels of unemployment and inequality are considered by the government and most South Africans to be the most prominent economic problems facing the country. 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