South Africa has gone through a tough patch in recent years, what with the global financial crisis hitting this emerging market country hard. The ZAR took a severe hit against the greenback in recent years, whittling down the net worth of South Africans by international standards. Over the past five years, the USD/ZAR pair has gone from 7.9516 on January 20, 2012 to its current level of 13.4614 on 17 January 2017. In between then, the currency hit a low of 16.7853 on 15 January 2016. Simply put, if you’re a South African your hard-earned currency doesn’t go very far outside the country.
How Does SA Compare in Terms of GDP?
According to Trading Economics, the gross domestic product of South Africa has been declining every year since 2011. Of course, the USD/ZAR currency rates have a lot to do with that. Take the figure in 2011 as a case in point: $416.42 billion was generated in that year, and this dropped to $396.34 billion in 2012. By 2013 South Africa’s GDP dropped further to $367.59 billion, and it dropped further to $351.31 billion in 2014. By 2015, South Africa’s GDP was a paltry $314.57 billion. That marked 4 successive years of GDP declines in dollar terms.
What does this mean for the average South African citizen? Not too much domestically but it indicates declining global competitiveness. South Africa’s annual GDP growth rate is just 0.70%, and the GDP per capita a $7,593.36. The country’s main GDP components are vested in manufacturing (R383,269.43 million), public administration (R470,912.80 million) and services (R620,671.23 million). Mining is playing a smaller part of South Africa’s overall GDP at R231,242.82 million. The World Bank GDP ranking has South Africa at #32 on the chart with a total of 217 economies listed. The top 5 countries include the United States, China, Japan, Germany and the United Kingdom, in that order.
How Are South Africans Doing on a Personal Level?
The jump from macroeconomic to microeconomic variables is a major one. South Africans by and large are going through a tough patch. The country’s unemployment rate was reported at 27.1% on 22 November 2016. Clearly, major challenges lay ahead for the beleaguered country. President Jacob Zuma has made a mockery of South Africa’s democracy, with nepotism, blatant abuse of public funds and incoherent policies.
This has affected the country on every level. South Africans are now finding it increasingly difficult to pay for everyday items like rent, food, education, vehicles and mortgages. However, despite economic setbacks getting a loan with bad credit is still possible but South African citizens and permanent residents need to shop around. Major South African banks like FNB, Standard Bank, ABSA and others are encouraging South Africans to cut down on expenditures on unnecessary items.
With spiraling interest rates, repayments on credit cards, home loans and automobile loans are no laughing matter. The goal in all instances is to limit expenditure, eliminate high credit card debt and make timely payments. It doesn’t help that South Africa’s credit rating has been downgraded to BBB – by Fitch on November 25, 2016 and to BAA2 by Moody’s on 6 May 2016.
Put in perspective, this means that South Africa will not be receiving favourable terms and conditions from big global banks and financial institutions given its inability to make good on its repayments. Once again, it is the political uncertainty that is placing the economic stability of the country at risk. The country now has to borrow at higher rates of interest than other countries with better credit ratings. This adds to the inflation rate in the country.
