The standard of living in South Africa will continue to be on a downward spiral over the next three years.
This warning was issued by the International Monetary Fund (IMF) this week following its visit to the country from July 1 to 8.
GDP figures released by Statistics SA this week showed that the economy displayed a mute growth of 0.4% in the three months through June.
The IMF visit was meant for the international lender to receive an update on the economic developments in the country as well as to conduct a post financing assessment.
The IMF’s assertion comes after the standard of living in South Africa has been in decline for more than a decade.
According to the IMF the GDP per capita – which measures the general standard of living – plummeted to R5 970 in 2024 from R8 800 in 2011. This generally means that an individual in 2024 is spending R5 970, a decrease of 32.2%, in the South African economy over the past 13 years.
The IMF warned that the South African economy was beset by persistent structural challenges, which continue to pose further risks to living standards.
“The IMF highlights that South Africa’s economy faces significant macroeconomic challenges, including declining GDP per capita, rising debt, high unemployment, poverty and inequality,” read a statement by the National Treasury.
“Global economic risks to South Africa’s economic outlook include a slowdown in trading partner growth, intensification of geopolitical tensions, and tighter global financial conditions.”
Economist Duma Gqubule said: “The IMF is saying we are going to have another three years of declining GDP per capita.”
This means that by the end of 2026, South Africa will have almost two decades of declining standards of living.
Gqubule attributed the woeful economic performance to the South African government adopting the IMF’s austerity policies. “South Africa has been the most loyal and diligent supporter of the IMF structural reforms policies.
South Africa started with fiscal consolidation and structural reforms in 2012. Twelve years later, there is nothing to show for South Africa’s loyally,” said Gqubule.
Gqubule said the government must stop listening to the IMF’s advice and develop a new path that would get the economy growing.
“We must start discussing a path that will put an end to this permanent austerity. Lessons show that if a government spends on its people and infrastructure, the economy will grow. The reason we’re having a declining GDP per capita and rising debt is that the government is not investing in its people and infrastructure,” he said. “Infrastructure investment over the past 15 years has collapsed by 25%. Spending on infrastructure grows the economy and creates jobs. If we focus on the GDP growth everything will take care of itself, whether it is unemployment or government debt.”
Economist Mandla Maleka said when the IMF approved the $4.3-billion Covid-19 capital assistance four years ago the same conditions of low economic growth, inflation, inequality, low per capita income and energy challenges were already glaringly obvious.
“This is despite our matrices on all economic indicators heading down. We have sound economic policies but the implementation has been difficult to maintain.”
Meanwhile, the Minister of Public Works and Infrastructure, Dean Macpherson, on Friday signed two declarations of intent with the China Communications Construction Company (CCCC) and ASI Global.
This followed an official state visit by President Cyril Ramaphosa.
In a statement, Macpherson said “the declaration of intent with the CCCC will work towards inviting the company to bid through the Public Management Finance Act in the construction of municipal works and buildings, the construction and development of public owned buildings and the development of fishing harbours and small ports”.
“The CCCC and ASI Global are two very important players in their respective fields, and the declarations of intents means that we can now invite them to make their expertise available to help develop our infrastructure and construction capabilities in South Africa, which will benefit the South African people across the country,” he said.
