The opening of the political process to all South Africans and the election of a new multiracial government in 1994 marked a turning point in South Africa's economic history. With a modest agriculture sector (though known for excellent fruits and wine), fabulous mineral wealth (gold accounts for over one-third of exports), a diverse manufacturing sector (centered in metals and engineering, and especially steel-related products), and growing financial services and tourism sectors, South Africa's influence extends well beyond its borders. It has a mixed economy, with substantial government intervention and a number of state-owned enterprises existing jointly with a strong private sector. A chief characteristic of the private sector is the high concentration of ownership by a small group of integrated conglomerate structures.
Real economic growth in the GDP fell from 1.1% in 1991 to about 0.5% in 1998. It stood at 2.6% in 2001. Still, analysts estimate that the economy must grow at between 5 and 10% if South Africa is going to overcome unemployment rates estimated at 37%. Although the white minority enjoys living standards equal to those in the rest of the industrialized world, most of the remaining 85% of the population has Third World living standards. The high prevalence of HIV/AIDS remains the major obstacle to achieving economic growth, and, with 5.2 million people living with the disease in 2000 and over 300,000 deaths caused by it, social upheaval only adds to the crisis. High unemployment, rigid labor laws, low skill levels, crime, and corruption hamper economic progress. Emigration has also emerged as one of South Africa's challenges, as those South Africans who are highly skilled find better markets for their skills abroad, especially in Australia, New Zealand, the UK, Canada, and the US.
Foreign direct investment in 2003 remained below levels targeted by the government; plans were made to build a knowledge and technology-based economy to attract investment. Structural economic changes and policies geared to lower inflation helped temper the effects on the South African economy of the global economic downturn that began in 2001. A rise in interest rates and a strong rand contributed to a fall in inflation in 2003, but so did an accounting error by the government, which caused many borrowers to pay more in interest on loans than they would have had the correct economic statistics been reported by the government. Business activity and consumer confidence subsequently fell. Nonetheless, economic growth was projected for 3.5% in 2004.