South Africa - Economic development
The recession of 1989 to 1993 was provoked by a drop in investment from 24% to 15%. With the inauguration of multiracial government in 1994, this investment was restored from about $13 billion in 1994 to about $18 billion in 1998, creating new jobs and generating growth. Tremendous changes in the structure of the economy are required as well to relieve the pressures of poverty and inequality which resulted from apartheid. A realistic strategy that attends to popular expectations and aspirations as well as to sound economic principles will look to reducing tariffs and other restrictive practices, linking wages and output, ending exchange controls, reforming taxes, and optimizing welfare allocations. The government implemented a Growth, Employment, and Redistribution (GEAR) plan to cover the years 1996–2000. The plan was successful in bringing macroeconomic stability to the country, but formal employment continued to decline, and wealth remained unequally distributed along racial lines.
South Africa has what may be called a dual economy—one comparable to industrialized nations and another comparable to developing countries. Trade liberalization increased from the early 1990s to the early 2000s. The Mbeki government in 2003 maintained a cautious fiscal policy, but due to the global economic slowdown, growth remained at 2.6% (it was forecast to rise to 3.5% in 2004). The government's monetary policy was geared to bring inflation down to the Reserve Bank's target of 3– 6% by the end of 2004. Unemployment in 2002 was estimated at 29%, but unofficial sources place it at around 41%. The government adopted plans to encourage development in specific regions and in small and medium enterprise development, in part to promote growth and the creation of jobs. South Africa is a member of the Southern African Customs Union (SACU) and the Southern African Development Community (SADC). South Africa has been severely hit by the HIV/AIDS pandemic, but the government has not effectively addressed the crisis, although an HIV prevention strategy was begun. Funding increases were anticipated for 2003–04. Johannesburg was the site of the 2002 World Summit on Sustainable Development, and South Africa is seen as a leader of the developing world on issues such as climate change, conservation, and biodiversity.