Global growth picked up in the second quarter of 2017, reflecting improving conditions in advanced economies and emerging market and developing economies (EMDEs), from pronounced weakness in the first half of 2016. Global growth is expected to increase from 2.4 percent in 2016 to 2.7 percent in 2017 and 2.9 percent in 2018, as commodity prices and financial markets continue to stabilise.

South Africa also emerged from recession in the second quarter of 2017. This is good news, but this growth is unlikely to restore positive per capita GDP growth in 2017, following negative per capita growth in 2015 and 2016. Between 2011 and 2016, per capita incomes barely increased and more than 3 million people have joined the 30.4 million poor South Africans now living on less than R1,131 per month (about US$2.9 a day).

Between 2008 and 2015, almost 80 percent of South Africa’s population experienced poverty, about half permanently and the other half intermittently.

Insufficient economic growth is pushing South Africa into a vicious circle: insufficient tax revenue raises the risk of public debt distress, which plays an important role in the downgrade of South Africa’s sovereign credit rating in early 2017. The credit rating downgrade in turn reduces investors’ appetite for South Africa, where their investments would support much-needed growth. Insufficient revenue and more complicated borrowing terms also limit the government’s capacity to support the economy and its citizens.

Report by the World Bank