South AfricaChapters
South Africa is the most industrialized, technologically advanced, and diversified economy on the African continent. As of 2024, the country's Gross Domestic Product (GDP) is estimated at approximately $350 billion USD, with a GDP growth rate of around 2.9%, reflecting a modest recovery from recent global and domestic economic challenges. The GDP per capita stands at approximately $5,800 USD, indicative of a middle-income economy with significant internal disparities.
The South African Rand (ZAR) is the national currency and remains subject to volatility due to both domestic policy issues and external global market pressures.
Trade and Investment
South Africa is a key player in regional and global trade:
- Main Exports: Minerals and metals (platinum, gold, coal, iron ore), agricultural products (fruits, wine), vehicles, and machinery.
- Primary Export Markets: China, United States, Germany, India, and the United Kingdom.
- Import Needs: Machinery, chemicals, petroleum products, and foodstuffs.
The country benefits from numerous trade agreements, including those with the Southern African Development Community (SADC), the African Continental Free Trade Area (AfCFTA), and preferential access to markets under the African Growth and Opportunity Act (AGOA) with the United States.
Labour Market and Employment
South Africa faces a persistently high unemployment rate, estimated at around 33% in 2024, with youth unemployment significantly higher. The labor force is large and diverse, though skills mismatches and educational gaps hinder broader employment growth.
Efforts are ongoing to address structural labor market issues, improve education outcomes, and foster entrepreneurship and small business development.
Key Challenges
Despite its strengths, South Africa faces several deep-rooted challenges:
- Income Inequality and Poverty: One of the highest Gini coefficients globally, reflecting vast disparities in wealth and access.
- Unemployment: Structural unemployment is a major barrier to inclusive growth.
- Electricity Supply Issues: Chronic energy shortages and dependence on Eskom, the state-owned utility, hinder productivity and investor confidence.
- Corruption and Governance Concerns: Past instances of state capture and corruption continue to affect public trust and economic efficiency.
Government Policy and Economic Outlook
The South African government is pursuing a range of economic reforms aimed at promoting growth, enhancing investment, and improving governance. The National Development Plan (NDP) remains the long-term blueprint for inclusive growth, job creation, and infrastructure development.
In the short to medium term, moderate economic growth is expected, driven by improvements in global demand, efforts to stabilize energy supply, and public-private collaboration on infrastructure projects. However, sustained progress will depend on addressing structural constraints, policy certainty, and restoring investor confidence.
Sources: IMF, Reuters
Key indicators
- Area
- 1,219,090 km2
- Population
- 60,442,447 (2024 est.)
- Government type
- parliamentary republic
- Languages
- GDP
- $400.19 billion (2024 est.)
- Growth rate
- 0,6% (2024 est.)
- HDI
- 114
- Capital
- Pretoria
Macroeconomic indicators
In 2025, South Africa continues to face a challenging but stabilizing economic environment. The country's nominal GDP is estimated at around US$410 billion, with GDP per capita approaching US$6,340. Real GDP growth is projected to remain subdued, with most forecasts placing it between 1.0 and 1.5 percent. Growth is constrained by persistent structural issues, particularly energy supply challenges, low investment levels, and global trade uncertainties.
Inflation in 2025 has remained relatively moderate. After easing significantly in late 2024, headline consumer price inflation is expected to average between 3.9 and 4.5 percent throughout the year. This moderation has allowed the South African Reserve Bank to adopt a more accommodative monetary policy stance. The repo rate has been trimmed slightly, sitting around 7.25 to 7.50 percent, with expectations of further rate cuts if inflation remains contained and economic activity continues to stagnate.
The labor market remains a significant concern. The official unemployment rate increased to approximately 32.9 percent in the first quarter of 2025, up from 31.9 percent in late 2024. Youth unemployment remains especially severe, with estimates placing it near 60 percent. Although there has been modest growth in formal sector wages, the employment outlook remains fragile due to weak business confidence and slow private-sector hiring.
Public finances continue to be under pressure. Government debt is projected to reach 77 to 80 percent of GDP. While the government has committed to fiscal consolidation, budget deficits remain elevated, around 5 to 6 percent of GDP. In early 2025, the Treasury proposed a phased VAT increase to shore up revenues, but this move was ultimately shelved following public and political opposition.
Structural bottlenecks, particularly in electricity generation and logistics, continue to limit economic potential. Load-shedding remains a major obstacle to industrial and commercial productivity, though some improvements in energy availability have been observed since March 2025. Efforts to diversify the energy mix and reduce reliance on Eskom are ongoing, with international financing support such as the $1.5 billion World Bank loan aimed at infrastructure upgrades and green energy transition.
Externally, South Africa faces a mixed outlook. Trade performance has been hampered by global demand uncertainty and tensions surrounding tariffs, particularly with major partners like the United States. However, the country still benefits from strong commodity exports and access to diverse international markets through its trade agreements.
Overall, the economic outlook for South Africa in 2025 is one of cautious optimism tempered by persistent risks. While inflation and monetary conditions have improved, structural challenges—especially in employment, public finance, and infrastructure—continue to constrain growth. Continued reform efforts, energy sector stabilization, and improved governance will be key to unlocking more robust and inclusive economic performance in the years ahead.
Source: OECD - Economic Forecast, IMF, Reuters
IMF Statistics:
| Subject descriptor | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
|
Gross domestic product, constant prices Percent change (Units) |
1.911 |
0.698 |
0.580 |
0.979 |
1.289 |
|
Gross domestic product, current prices U.S. dollars (Billions) |
406.755 |
380.592 |
400.191 |
410.338 |
424.241 |
|
Gross domestic product per capita, current prices U.S. dollars (Units) |
6,629.419 |
6,111.746 |
6,331.913 |
6,396.921 |
6,516.343 |
|
Inflation, average consumer prices Percent change (Units) |
6.864 |
5.903 |
4.426 |
3.792 |
4.525 |
|
Volume of imports of goods and services Percent change (Units) |
14.985 |
3.949 |
-6.095 |
2.048 |
2.938 |
|
Volume of exports of goods and services Percent change (Units) |
6.818 |
3.732 |
-2.040 |
1.393 |
2.546 |
|
Unemployment rate Percent of total labor force (Units) |
33.500 |
33.100 |
32.800 |
32.782 |
32.682 |
|
Current account balance U.S. dollars (Billions) |
-2.035 |
-6.074 |
-2.578 |
-5.055 |
-5.965 |
|
Current account balance Percent of GDP (Units) |
-0.500 |
-1.596 |
-0.644 |
-1.232 |
-1.406 |
Estimates
Source: IMF Statistics
Relationships with Luxembourg
Existing conventions and agreements
Non double taxation agreement
In order to promote international economic and financial relations in the interest of the Grand Duchy of Luxembourg, the Luxembourg government negotiates bilateral agreements for the avoidance of double taxation and prevent fiscal evasion with respect to Taxes on Income and on fortune with third countries.
- Convention from 23.11.1998 (Memorial 2000, A No. 87, p. 2045)
- Effective as of 01.01.2001 (Memorial 2000, A No. 141, p. 2045)
Air Services agreement
- Agreement from 17.2.1994 (Memorial 1995, A, p. 1646)
- Effective as of 06.12.1995 (Memorial 1995, A, p. 2566)
Further information
Foreign Trade
The Statec Foreign Trade statistics provide information on the trade of goods - by product and by country. This information is collected respectively through the INTRASTAT declaration and on the basis of customs documents. You can see the statistics on the website of the Statec.
Contact points in South Africa
Luxembourg is represented by the Ambassade Royale des Pays-Bas à Pretoria
Competent post for consular affairs by the Ambassade du Royaume de Belgique à Pretoria
Source: Ministry of Foreign Affairs Luxembourg
Honorary Consul of Luxembourg to the Western Cape province
Mr Philip Geromont
35 Lower Long Street, Foreshore
Cape Town 8001
South Africa
Phone: +27 (0)83 459 99 66
E-mail: capetown@consul-hon.lu
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