Apartheid also created numerous tiers of bureaucracy, exacerbating inefficiencies as well as boosting government consumption expenditure to the detriment of the private sector. A principal casualty was fixed investment spending, which declined from an average of 24 percent of Gross Domestic Product (GDP) in the 1960s to recent levels of under 15 percent. .
The rising conflict led to growing international isolation. By 1986 most countries had imposed trade and financial sanctions as a result of the slow rate of genuine political reform. Although these hampered economic growth, exporters were able to circumvent most such restrictions, but at a definite cost. However, a more serious development was the withdrawal of foreign credit lines during the course of 1985. The imposition of a debt standstill and the reintroduction of the financial Rand helped to curb some of the huge capital outflows, but forced the country into being a net saver. The maintenance of a current account surplus, in order to pay back debt, was achieved at the cost of restricting growth and therefore import demand. Since 1985 the economy has grown by only 0,9 percent per annum and real income per capita has shrunk by 1,3 percent on average each year. However, with Gross National Product (GNP) per capita of $2 670, South Africa is still in a similar range to countries such as Chile, Mexico, Hungary, Thailand, and Malaysia. .
Economic prospects.
Since the middle of 1993 the South African economy has experienced an upturn in economic activity, having endured a severe recession from 1989 to 1993. Economic activity increased sharply during the second half of 1993 and has continued to rise in 1994. .
The initial recovery of economic activity was greatly assisted by favourable weather conditions, which led to a sharp increase in ~agricultural output. The agricultural sector experienced a ~devastating drought during the 1991/92 season.