South Africa: Selected Issues
Author: International Monetary Fund. African Dept.
Publication Date:
30 Jan 2020
eISBN:
9781513528519
ISBN:
9781513528519
Language:
English
Keywords:
ISCR; CR; rand volatility; inflation expectation; monetary policy; rand; growth-inflation tradeoff; monetary policy action; demand growth; administered price inflation; Private investment; Inflation; Depreciation; Currencies; Total factor productivity; Africa; Global; investment financing issue; per-capita GDP growth; EM median; investment opportunity; product market reform; Labor markets; Commodity markets; Exports
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Selected Issues

Abstract

Selected Issues

Growth in South Africa: Issues and Reform Options1

Since 2007 South Africa’s growth performance has been persistently weaker than in other emerging markets due to a deteriorating business environment that in turn responds to weakening institutions, reduced competition, and low public spending efficiency, compounded by labor market rigidities. Boosting growth wiii require strengthening the macroeconomic environment and institutions, reducing microeconomic distortions in product and labor markets, and improving the provision and quality of complementary inputs for production.

A. Introduction

1. South Africa’s weak growth performance has contributed to high unemployment levels. Real per capita GDP growth has averaged 1.2 percent since 1994 compared to 2.8 percent for emerging market (EM) comparators and 5 percent for the top EM growth performers within the sample.2 Underperformance became more marked in the last 5 years when per-capita GDP growth was negative. Except for a growth acceleration period (2001–07), job creation was persistently insufficient to absorb a rapidly growing labor force, driving the unemployment rate to about 29 percent (56 percent for the youth). Moreover, 40 percent of the unemployed (60 percent of the youth) have never had a job, and one third of the unemployed have not been employed for 5 years.

uA03fig01

Real GDP Per Capita Growth

(Percent change, year on year)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: IMF World Economic Outlook, October 2019.
uA03fig02

Unemployment

(Percent)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: IMF International Financial Statistics.

2. Poverty and inequality have increased due to their correlation with employment. Income from employment accounts for 40 percent of total income for poor households and 80 percent for households that move out of poverty. In the context of feeble growth and skilled labor scarcity, the bulk of new jobs are taken by high-skilled, educated, and experienced workers, who are also better paid, contributing to increasing income inequality. Improving growth performance and job creation is critical to reversing the deteriorating trend in social indicators.

B. Growth Characteristics

Weak Private Investment and TFP

3. Low contributions of private investment and total factor productivity (TFP) underlie South Africa’s subdued growth performance. A growth accounting exercise suggests that private investment’s contribution to growth was about half of that of the median EM and 40 percent of the top growth performers’ in 1994–2018. This has been accompanied by a contribution of TFP that is less than half of that in the median EM and one third of the one for top growth performers, clearly revealing the large role of factor allocation efficiency in growth underperformance.

Growth Accounting: South Africa and Other EMs 1994–2018

article image
Source: Fund Staff Estimates.

4. The relative growth underperformance with respect to peers after 2007 coincided with a sharp decline in TFP growth and a change in the composition of investment. TFP growth was above the median EM’s in 1994–2007 but became negative and lower than the median in 2008–18, reflecting deteriorating allocative efficiency. In addition, while the contribution of investment to growth was lower than in other EMs in both periods, its composition changed significantly with private investment contributing 30 percent less and public investment doubling its contribution. This trend is also confirmed by the evolution of investment levels. After some catch-up during 2001–08, private investment declined drastically and remained largely stagnant, reopening a large gap with other EMs. Public investment started to increase in 2006 (25.6 percent), peaked in 2009 (36.7 percent), and declined in recent years due to weakening finances.

uA03fig03

Private Investment

(Percent of GDP)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: IMF World Economic Outlook, October 2019.
uA03fig04

South Africa: Contributions to Real GDP Growth

(Percent)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Large Contribution of the Non-Tradable Sector amid Lackluster Export Performance

5. Growth was led by sectors that tend to produce exclusively for the domestic market (i.e., non-tradable sectors). The share of private non-tradable sectors (i.e., construction and tertiary private services)3 in total value added increased by about 14 percentage points since 1994 largely at the expense of tradable sectors (i.e., agriculture, mining, and manufacturing) and to a lower extent the public non-tradable sector (i.e., general government, electricity and water). The relative price of tradable goods in the economy, measured through national accounts deflators, exhibited a declining trend, reflecting incentives to allocate resources to non-tradable sectors.4 Within the tradable and non-tradable sectors, all sub-sectors contracted and expanded, respectively. Mining was the worst performing sub-sector, while finance, business services, and real estate were top performers.

uA03fig05

Sector Shares in Real Value Added

(Percent of real gross value added)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: Statistics South Africa.
uA03fig06

Relative Price of Tradables in terms Private Non Tradables

(Index, 2010=100)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: Statistics South Africa.
uA03fig07

Tradable Sectors Shares in Real Value Added

(Percent of real gross value added)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: Statistics South Africa.
uA03fig08

Non Tradable Sector Shares in Real Value Added

(Percent of real gross value added)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: Statistics South Africa.

6. Export performance was lackluster compared to other EMs. South Africa’s exports have remained broadly stagnant as a share of world goods exports, in clear contrast to the increasing trend in exports of the median EM and the fastest growing EMs in the sample. The composition of exports shows that the importance of minerals and manufacturing sectors has remained broadly unchanged. The lack of export dynamism is also confirmed by the export complexity index of the Growth Lab at Harvard University, which presents South Africa with one of the least complex export structures among EMs.

uA03fig09

Market Share of Goods Exports

(Percent of total world goods exports)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Sources: IMF International Financial Statistics, and staff calculations.
uA03fig10

South Africa: Export Structure

(percent of goods exports)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: UN Comtrade and staff calculations.

Strong Consumption Contribution

7. On the demand side, consumption provides the greatest contribution to growth. This is consistent with the relatively weak contribution of private investment and net exports during 1994–2018, with some exceptions usually related to growth decelerations in recent years.

uA03fig11

Contributions to Growth-Demand Components

(Percent per annum)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Sources: Statistics South Africa, and IMF staff calculations.

Large Role of Government

8. The public sector carries out a larger share of investment compared to other EMs. On average, public investment in South Africa has represented 31 percent of total investment compared to 22 percent in the median EM and 24 percent in the top growth performers during 1994–2018. Public investment has been particularly high by historical standards since 2007 and has only declined in recent years to give room to other budget and SOE expenses. The high public investment period after 2007 coincided with the deterioration in TFP growth captured in the growth accounting exercise.5

uA03fig12

Share of Public Investment in Total Investment

(1994–2018 average, percent)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Sources: Statistics South Africa, IMF World Economic Outlook (October 2019).
uA03fig13

Public Investment

(Percent of GDP)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: IMF World Economic Outlook, October 2019.

9. The role of government, as measured by the size of public expenditure, increased significantly after 2007. South Africa’s government expenditure was on average about 2 percentage points of GDP above the median EM and about the same level of the top performers in 1994–2007. After increasing on average by 6 percentage points of GDP in 2008–18, public expenditure as a share of GDP was about 3 percentage points of GDP higher than the median EM and 2 percentage points of GDP higher than the top performers during the period.

uA03fig14

Government Expenditure

(Percent of GDP)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: IMF World Economic Outlook ,October 2019.

10. Increased expenditure resulted in a permanent widening of fiscal deficits and led to a faster debt accumulation than in other EMs. While South Africa had significantly lower debt levels than other EMs in 1994–2007, as of end-2018 its debt surpassed the median of EM comparators and top growth performers. The favorable trend of accelerating growth and debt reduction that occurred during 2001–07 was replaced by the worsening dynamics of slowing growth, high deficits, and debt accumulation.

uA03fig15

Fiscal Deficit

(percent of GDP)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: IMF World Economic Outlook, October 2019.
uA03fig16

Gross Debt

(percent of GDP)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: IMF World Economic Outlook, October 2019.

C. Identifying Main Constraints to Growth

Methodology

11. The methodology used to identify main constraints to growth is based on the growth diagnostics approach by Hausmann etal. (2008). The approach offers a structured method to consider alternative hypotheses that could explain the factors behind weak private investment and TFP based on country experiences. These hypotheses are summarized in the form of a stylized tree with several levels. The first level explores whether weak private investment responds to a low rate of return (i.e., either because of dearth of profitable investment projects or because investors cannot appropriate the returns) or to availability/cost of financing. The next levels explain more specifically potential factors that could lead to low rates of return, and investment financing issues (i.e., availability or cost).

12. Specific hypotheses to explain weak private investment are considered. These include (1) microeconomic features (e.g. market regulations, labor market legislation, governance weaknesses) that raise the cost of doing business; (2) macroeconomic factors (e.g. unsustainable debt, high and volatile inflation, political risks, conflict) that lower the return on investment or create uncertainty; (3) complementary inputs for business (e.g. inadequate infrastructure, education, health and security); (4) market failure (coordination / information externalities) that constrain the availability of key inputs;6 (5) financing constraints as measured by the level of national savings or international market access; and (6) financial intermediation issues that could lead to high lending spreads and borrowing costs.

13. The growth diagnostics approach is then complemented by a quantification exercise to provide a sense of which reforms could produce the largest per capita growth gains. The exercise, which draws from Prati etal. (2013) and Egert and Gal (2016), investigates the impact of certain reforms on per capita GDP growth to further inform reform prioritization.7 The reforms under consideration guided by the growth diagnostics results are (1) improving the efficiency of product markets; (2) increasing the flexibility of labor markets (i.e. addressing wage rigidity and the cost of workforce management); (3) improving the provision/quality of complementary factors/inputs such as health, education, infrastructure, security; and (4) adopting macroeconomic reforms that reduce policy and regulatory uncertainty.

Main Results

Growth Diagnostics

14. Access to finance or cost of financing were not binding constraints to private investment. Private savings exceeded private investment during most years in 1994–2018 excluding the period 2004–08 (except for 2008–09, where financing became a constraint to most EMs). Even in the few years when private investment exceeded private savings, abundant access to international finance was available to cover the gap as evidenced by wide current account deficits. These deficits continued thereafter but largely to finance the general government and SOEs.8 South Africa also has access to a large pool of financial savings, especially through pension funds, insurance companies, and investment banks (more than 200 percent of GDP).

uA03fig18

Savings and Investment and Current Account Balances

(Percent of GDP)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: Haver Analytics.

15. Financial intermediation was not a major obstacle either.9 The lending spread had been close to the EM median before 2007 but below thereafter. Similarly, after 2007, the real lending rate has continued to decline in line with the EM median for the most part. Even when the real lending rate was higher than the EM median, growth was considerably faster than in recent years.

uA03fig19

Lending Spread

(Percent)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Sources: IMF International Financial Statistics, and staff calculations.Note: Difference between lending and deposit rates.
uA03fig20

Real Lending Rate

(Percent)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Sources: IMF International Financial Statistics, World Economic Outlook (October 2019), and staff calculations.

16. The behavior of foreign direct investment points to low returns to investment. The five-year moving average of FDI has been consistently below the median level of other EMs. Moreover, the decline in FDI that followed 2009 was slightly above 50 percent compared to 20 percent in the median EM despite already low levels. At the same time, South African corporates increasingly started to seek investment opportunities abroad (see IMF 2016). These developments suggest that a low rate of return to private investment has been a long-standing problem, worsening after 2009.

uA03fig21

Direct Investment, Net Incurrence of Liabilities

(Percent of GDP)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Source: IMF World Economic Outlook, October 2019.Note: Five year moving average.

17. The evidence that low returns to private investment are a result of market failures is limited. Countries where this problem is prevalent are expected to have significant correlations between GDP per capita and terms of trade, as they cannot easily shift to other types of exports with better relative prices when terms of trade shocks occur. However, the evidence is mixed on this hypothesis during 1994–2018. While South Africa’s export complexity is relatively low as previously noted, the correlation coefficient between GDP per capita and the terms of trade is weak (0.2).

18. A business environment not conducive to investment is the most likely factor underlying low and deteriorating rates of return to private investment. A significant deterioration in South Africa’s Global Competitiveness indicators (GCI) and Doing Business Indicators (DBI) scores coincided with the protracted decline in private investment after growth peaked in 2007.10 Main areas of deterioration in the GCI categories include the macroeconomic environment, higher education and training, goods market efficiency, and institutions.11 Deterioration in the infrastructure category is also observed. The most significant long-standing relative weaknesses compared with other EMs remained in health and primary education and labor market efficiency areas.12 (Box 1) Within the institutional category, a longstanding relative weakness in security is also noteworthy and is confirmed by a variety of other data pointing to adverse impacts on the cost of doing business, especially on SMEs and tourism (see Annex I).

uA03fig22

South Africa: Global Competitiveness Index

(Distance of Score from EM Median Score, Percent of standard deviation)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Sources: World Economic Forum Global Competitiveness Index and IMF staff calculations.
uA03fig23

South Africa: Ease of Doing Business

(Distance of Score from EM Median Score, Percent of standard deviation)

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Sources: World Bank Doing Business and IMF staff calculations.

19. These findings are broadly consistent with those in the literature and recent work by the National Treasury. Dube, Hausmann, and Rodrick (2007) in a survey of possible binding constraints to growth point to low levels of competition by international standards, and high cost of labor (especially elevated premiums for skilled workers and regulated hiring and firing). Faulkner and Loewald (2008) documented the critical role that prudent fiscal policy and sound macroeconomic management had in the growth acceleration period but noted that microeconomic reforms broadly in the areas identified above were needed to sustain the growth acceleration. More recently, National Treasury (2019), which draws on a large array of South African and international literature, points to political and policy uncertainty, institutional weaknesses, poorly managed state-owned companies, and barriers to entry that distort product markets as important factors contributing to the low growth environment. It also acknowledges the need to support the stable macroeconomic environment necessary for sustained growth.

Per Capita Growth Gains from Reform Estimates

20. Results suggest the need to prioritize product market reforms and improve the macroeconomic environment. Product market reforms are estimated to add slightly above 1 percentage point to per-capita growth once complete. South Africa lags other EMs in this area by less than in the area of complementary factors. In this sense, reaping the full benefits of product market reforms may be less difficult than achieving gains from complementary factors (e.g., health and education), which by their nature also take longer to materialize.13 Similarly improving the macroeconomic environment would yield about 0.7 percentage points, and the distance to the frontier is lower than for labor markets and complementary reforms. These results confirm the findings of the growth diagnostics that the deterioration in the macroeconomic environment and goods market efficiency were among the top factors underlying the weakening business environment since 2008.

uA03fig24

Real GDP per Capita Growth Gains and Distance to the Frontier

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Sources: IMF Staff estimates each indicator in a sample of 20 EM countries

21. Estimates also confirm the importance of addressing deficiencies in the provision of complementary factors and labor market rigidities. While the gains from reforms in these areas may be more difficult to achieve and could involve more time, the combined growth payoff of these reforms over time would be potentially as large as those in the macroeconomic environment and labor markets. Moreover, these areas are also those where South Africa tends to lag other EMs the most. Successful implementation of product market and macroeconomic environment reforms can help create reform momentum to advance other reforms. The text chart summarizes the policy options to boost growth suggested by the growth diagnostics and this analysis, which are discussed in detail in the staff report.

uA03fig25

Policies to Boost Growth

Citation: IMF Staff Country Reports 2020, 034; 10.5089/9781513528519.002.A003

Main Issues Highlighted by GCI, 2008–2018

article image

For a more detailed discussion of barriers to entry see World Bank (2018), Section 3.4 “Contestability of Product Markets”. Results on regulatory issues suggested above are also consistent with the OECD findings that South Africa is more heavily regulated that many OECD countries.

Restrictions to skilled immigration further increase the scarcity of skilled workers.

These results are consistent with findings in IMF (2018) where health and education expenditure levels are found comparable to OECD levels, but outcomes are weaker than countries that spend considerably less.

Annex I. Crime in South Africa and Its Business Impact

References

  • Dube, O., R. Hausmann and D. Rodrik. 2007. “South Africa: Identifying the Binding Constraint on Shared Growth.” {Publisher?}

  • égert, B. and P. Gal. 2016. “The Quantification of Structural Reforms in OECD Countries: A New Framework.” OECD Working Paper No. 1354.

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  • Faulkner, D. and C. Loewald. 2008. “Policy Change and Economic Growth: A Case Study of South Africa.” World Bank Working Paper No. 41.

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  • Hausmann, R., B. Klinger and R. Wagner. 2008. “Doing Growth Diagnostics in Practice: A ’Mindbook’.” Harvard Center for International Development Working Paper No. 177.

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  • Organization of Economic Cooperation and Development. 2017. “OECD Economic Surveys South Africa”, http://www.oecd.org/economy/south-africa-economic-snapshot/

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  • International Monetary Fund. 2018. Selected Issues, “What Led to the Doubling of Public Debt in the Last Decade? Was Debt good for Growth?” Page 4. Washington, DC.

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  • International Monetary Fund. 2016. Staff Report for the 2016 Article IV consultation, Box 2, Page 7. Washington, DC.

  • International Monetary Fund. 2017. Staff Report for the 2017 Article IV consultation, Annex 2, Page 44. Washington, DC.

  • National Treasury. 2019. “Economic Transformation, Inclusive Growth, and Competitiveness: Towards and Economic Strategy for South Africa.” http://www.treasury.gov.za/comm_media/press/2019/Towards%20an%20Economic%20Strategy%20for%20SA.pdf

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  • National Treasury. 2019. Budget Review. Annex D Public Infrastructure Update. Table D1. http://www.treasury.gov.za/documents/national%20budget/2019/review/FullBR.pdf

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  • Prati, A., M. Onorato, and C. Papageorgiou. 2013. “Which Reforms Work and under What Institutional Environment: Evidence from a New Dataset on Structural Reforms.” Review of Economics and Statistics, 95(3) July, p. 946–968.

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  • The Global Competitiveness Index 4.0 Dataset. 2018. http://reports.weforum.org/global-competitiveness-report-2018/downloads/

  • The Growth Lab at Harvard University. 2019. “Growth Projections and Complexity Rankings”, https://doi.org/10.7910/DVN/XTAQMC

  • World Bank Group. 2018. “Systematic Country Diagnostic: An Incomplete Transition – Overcoming the Legacy of Exclusion in South Africa”. Washington, D.C. http://documents.worldbank.org/curated/en/815401525706928690/South-Africa-Systematic-country-diagnostic-an-incomplete-transition-overcoming-the-legacy-of-exclusion-in-South-Africa

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  • World Bank Doing Business Data, https://www.doingbusiness.org/en/data

1

Prepared by Alejandro Simone, Zhangrui Wang, and Yiruo Li; reviewed by Ana Lucía Coronel.

2

The EM group includes Argentina, Brazil, Chile, China, Colombia, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, The Philippines, Poland, Russia, South Africa, Thailand, Turkey, and the United Arab Emirates. The EM top performers are the 5 countries within the EM who experienced the highest compounded growth rates in real GDP per capita from 1994 to 2018 and includes India, China, Peru, Poland, and Turkey.

3

Tertiary private service sectors include wholesale, retail, trade, hotels and accommodation, transport, financial, business and real estate, and personal services as defined by the National Accounts.

4

The relative price of tradables is defined as the price of tradables divided by the price of private non-tradables. The price level for each relevant sector component was weighted by its corresponding share in value added for a given year to give the overall sector price level for a given year.

5

Concerns about efficiency and governance of SOEs could help explain this performance as they carry out about 40 percent of public investment as shown by the 2019 Budget Review for FY15/16 to FY17/18.

6

Coordination externalities refer to circumstances where it is not profitable for suppliers to produce certain key inputs because of insufficient demand, which in turn occurs because those considering producing goods that use these key inputs lack suppliers of these inputs. Information externalities arise when an innovating producer has to incur costs to adapt a certain technology to a country where imitators can free ride. As a result, there will either be insufficient incentives for production of optimal levels of certain inputs or, in the extreme, production will not occur.

7

Estimates of the impact of structural reforms on per capita GDP are performed in three steps. First, the impact of an improvement of each structural indicator on each production factor (i.e., capital, labor, and productivity) is estimated with a panel data regression on a sample of 184 countries over 2000–18. Second, the impact of an improvement in each statistically and economically significant indicator to its corresponding 75th percentile value in the sample over a certain period is calculated. This is done by replacing the impact on capital, labor, and TFP estimated in the first step for a given indicator into a production function. Third, the overall impact of a given reform (e.g. product market reform) is computed by aggregating the impact of an improvement in all its component indicators to the 75 percentile.

8

The correlation between the current account deficit and per capita GDP growth is low. Current account deficits have been persistent despite slowing growth. This is consistent with access to international finance not being a constraint.

9

This is not to suggest that all segments of the corporate and household sectors had access to credit at affordable rates. As discussed in IMF (2017), surveys suggest that lack of access to affordable financing is an issue for SMEs and vulnerable households.

10

The GCI are produced by the World Economic Forum, and combine both official data and survey responses from business executives on several dimensions of competitiveness. The DBI are produced by the World Bank and are survey-based indicators that reflect investors’ perceptions on the business environment.

11

The categories mentioned are those where South Africa’s scores declined the most in the pre-2018 revision GCI methodology excluding the financial market development which was discussed in the previous paragraphs based on more reliable non-survey-based data. The pre-2018 GCI methodology revision data is used to maximize comparability with the 2008 data. The GCI methodology was subject to a major revision in 2018 and scores are no longer comparable thereafter.

12

These are the categories where South Africa scored below the EM median using the pre-2018 revision GCI methodology in both 2008 and 2018.

13

The distance to the frontier is a proxy for reform difficulty. The further the indicators are from those of the better performing EMs, the more they suggest that there is some difficulty in a specific country to improve them since they otherwise would have achieved improvements already.

Same Series

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Other Publishers

Cover IMF Staff Country Reports
South Africa: Selected Issues
Author: International Monetary Fund. African Dept.
Volume/Issue:
Volume 2020: Issue 034
Publisher:
International Monetary Fund
ISBN:
9781513528519
ISSN:
1934-7685
Pages:
38
DOI:
https://doi.org/10.5089/9781513528519.002

Real GDP Per Capita Growth

(Percent change, year on year)

Unemployment

(Percent)

Private Investment

(Percent of GDP)

South Africa: Contributions to Real GDP Growth

(Percent)

Sector Shares in Real Value Added

(Percent of real gross value added)

Relative Price of Tradables in terms Private Non Tradables

(Index, 2010=100)

Tradable Sectors Shares in Real Value Added

(Percent of real gross value added)

Non Tradable Sector Shares in Real Value Added

(Percent of real gross value added)

Market Share of Goods Exports

(Percent of total world goods exports)

South Africa: Export Structure

(percent of goods exports)

Contributions to Growth-Demand Components

(Percent per annum)

Share of Public Investment in Total Investment

(1994–2018 average, percent)

Public Investment

(Percent of GDP)

Government Expenditure

(Percent of GDP)

Fiscal Deficit

(percent of GDP)

Gross Debt

(percent of GDP)

Savings and Investment and Current Account Balances

(Percent of GDP)

Lending Spread

(Percent)

Real Lending Rate

(Percent)

Direct Investment, Net Incurrence of Liabilities

(Percent of GDP)

South Africa: Global Competitiveness Index

(Distance of Score from EM Median Score, Percent of standard deviation)

South Africa: Ease of Doing Business

(Distance of Score from EM Median Score, Percent of standard deviation)

Real GDP per Capita Growth Gains and Distance to the Frontier

Policies to Boost Growth