South Africans are poorer than they were in 2007
Speaking to Moneyweb radio, Coface economist Aroni Chaudhuri revealed that per capita GDP in 2025 is below the 2007 levels, and this is mainly due to the collapse of the energy system and the unemployment crisis.
He added that South Africa’s economy has failed to live up to the expectations of 20 years ago.
Per capita GDP is a country’s gross domestic product (GDP) divided by its total population, representing the average economic output per person.
It is a key metric used to assess a country’s standard of living and compare economic prosperity between nations.
A higher per capita GDP generally indicates greater economic productivity and can be correlated with higher living standards.
Chaudhuri noted that South Africa’s economic trajectory after 2007 can only be understood by looking at the fundamentals that have held the country back for nearly two decades.
He explained that when South Africa joined BRICS in 2010, there were hopes that the country would continue to expand at a fast pace. It was supposed to be one of these beacons of the emerging world.
Instead, he said the country has basically underperformed every other emerging economy for 20 years.
This prompted him to explore why South Africa has diverged so sharply from peers that faced many of the same global shocks. Chaudhuri stressed that external factors alone cannot explain the decline.
While South Africa is a highly open economy—very open to trade and also well-integrated into financial networks—other emerging markets weathered the global economic crisis and subsequent volatility far better.
“This meant that basically there was something in the engines of South African growth that have been failing to work,” he said.
Those engines, he argued, are two core foundations, which are the energy system and the labour market.
“These are foundations of economic activity and of human society, and when these foundations fail, growth stalls, living standards stagnate, and even well-designed policies lose traction,” he explained.
“If the foundations are not functional, you can try to adopt an expansionary fiscal policy… but ultimately they’re less effective because you don’t have enough energy in the economy and the economy’s not creating enough jobs.”
Recovery will be slow
Although load shedding has eased, Chaudhuri warned against assuming the energy crisis is over.
“We can’t say that it exactly ended because officially it’s still there. The underlying pressures remain severe,” he said.
South Africa’s electricity supply is built on ageing coal stations and decades of underinvestment.
Modernising the system will take far more than stabilising Eskom’s operations. Chaudhuri pointed to the poorly structured price regulation from 2008, which has left the utility unable to generate the revenue needed for long-term sustainability.
He noted that electricity tariff increases have weighed on households for decades and have now prompted many consumers to seek alternative sources of supply.
“You still have an issue to solve on the revenue because Eskom must be able to invest enough to ensure future supply while remaining financially viable,” he said.
He acknowledged that government support has helped, but a durable solution is needed to stabilise the stream of revenue so that they can invest.
This will ensure that if economic growth ignites, the increased electricity demand does not put too much pressure on the system, causing it to break down again.
On the labour side, structural unemployment has become both an economic and a social constraint crisis.
Chaudhuri stressed that joblessness limits household income and places a cap on domestic demand for goods and services.
At the same time, some corporations were unable to fill their vacancies correctly due to these distortions.
That combination—high unemployment alongside shortages of critical skills—created a drag on growth that cannot be solved quickly.
Even with recent political changes and strong institutional foundations, Chaudhuri warned that recovery will be slow.
“The road to decent growth… is going to be slow regardless, even if we get it right. This is because the decline in the country’s core systems has occurred over decades,” he said.
“These long-term trends and the deterioration have been going on for at least two decades,” he noted.
For energy infrastructure, it may be even longer. Already in 1998, there were signals that the system was under pressure.
For this reason, expectations must be realistic. “If you want to reignite long-term growth, it’s going to take some time.
However, he argued that targeted reforms can succeed—if they address the structural roots rather than symptoms.
“Reforms that target the energy system, that target the transport networks, and social policies that target the lower levels of income… those are the reforms that can add up and reignite growth.”
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