Growth Benefits of Macro-Structural Reforms in South Africa

South Africa's economic growth has stagnated over the past decade due to entrenched structural rigidities. This paper examines the impact of reforms addressing shortcomings in governance, business regulation, and labor market on output and employment. The analysis quantifies the potential economic gains from narrowing structural gaps in these three areas relative to peer countries. Reforms in governance and business regulation are found to boost medium-term output by up to 9 percent. Complementary labor market reforms could further bolster these gains and enhance employment. These findings emphasize the importance of a well-prioritized reform agenda to unlock South Africa’s growth potential and generate broad-based improvements in living standards.