In a damning assessment, the South African Reserve Bank (SARB) has declared the nation’s economic performance over the past decade to be among the worst globally, comparing it to countries ravaged by war and major disasters.
Despite enjoying relative peace both domestically and within its region, South Africa’s economic growth rate has been weaker than 90% of other world economies, placing it firmly “at the bottom of the class,” according to the central bank.
The bleak picture extends to inflation. While not deemed a “catastrophe,” the country’s average annual headline inflation rate of 5% over the last ten years is higher than that of 70% of other nations. The SARB states this persistent inflation has resulted in a price level that is 60% higher than in 2015, dramatically eroding purchasing power. An item that cost R60 a decade ago now costs approximately R100.
The sobering data was the focus of a televised interview with economist Tosis Madonsela, who argued that the root cause is a flawed macroeconomic policy mix.
“The current policy mix that’s being implemented has resulted in the crisis that we’re facing now,” said Thokozile Madonko, an economist with the Southern Center for Inequality Studies. She pointed to a combination of austerity measures, strict inflation targeting, and inadequate industrial policy as key failures since the 2008 financial crisis.
Madonko challenged the SARB’s focus on targeting a 3% inflation rate, calling it “irresponsible” for a middle-income country with the world’s highest inequality. She argued that higher inflation could be tolerated if wages increased at a faster rate, but real wages for average workers have stagnated while social grants have lost significant value.
The interview also highlighted issues of market concentration and price gouging by large corporations, particularly in the minerals sector, which are recording “super profits” while not remunerating workers fairly.
To reverse the trend, Madonko advocated for a heterodox economic approach, calling for a significant government-led stimulus package focused on social infrastructure rather than austerity.
“We need a shot in the arm,” she stated, recommending major public investment in the “care economy”—including education, health, and social protection. She cited research suggesting that investing in teachers, doctors, and social services offers a better return on investment and a higher economic multiplier effect than large-scale infrastructure projects like new power stations.
The analysis presents a stark warning: without a fundamental shift in policy toward stimulus and social investment, South Africa risks continuing its trajectory as a global economic laggard, with its citizens bearing the brunt of a severe cost-of-living crisis.