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.<\/p>\n\n\n\n
He added that South Africa’s economy has failed to live up to the expectations of 20 years ago.<\/p>\n\n\n\n
Per capita GDP is a country’s gross domestic product (GDP) divided by its total population, representing the average economic output per person.<\/p>\n\n\n\n
It is a key metric used to assess a country’s standard of living and compare economic prosperity between nations. <\/p>\n\n\n\n
A higher per capita GDP generally indicates greater economic productivity and can be correlated with higher living standards.<\/p>\n\n\n\n
Chaudhuri noted that South Africa\u2019s economic trajectory after 2007 can only be understood by looking at the fundamentals that have held the country back for nearly two decades. <\/p>\n\n\n\n
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. <\/p>\n\n\n\n
Instead, he said the country has basically underperformed every other emerging economy for 20 years. <\/p>\n\n\n\n
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.<\/p>\n\n\n\n
While South Africa is a highly open economy\u2014very open to trade and also well-integrated into financial networks\u2014other emerging markets weathered the global economic crisis and subsequent volatility far better.<\/p>\n\n\n\n
\u201cThis meant that basically there was something in the engines of South African growth that have been failing to work,\u201d he said.<\/p>\n\n\n\n
Those engines, he argued, are two core foundations, which are the energy system and the labour market.<\/p>\n\n\n\n
\u201cThese 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,\u201d he explained.<\/p>\n\n\n\n
\u201cIf the foundations are not functional, you can try to adopt an expansionary fiscal policy\u2026 but ultimately they\u2019re less effective because you don\u2019t have enough energy in the economy and the economy\u2019s not creating enough jobs.\u201d<\/p>\n\n\n\n
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