As the most important metro in terms of contribution to provincial and national gross domestic product (GDP), Johannesburg is a leading and robust market for investors, distributors and retailers in Gauteng.
On average, Johannesburg's residents enjoy a higher standard of living than people living in South Africa's other major cities.
Compared with other cities, particularly Cape Town, eThekwini (greater Durban) and Nelson Mandela (greater Port Elizabeth), Johannesburg is ahead: its markets are growing faster and, on average, its inhabitants are wealthier.
Johannesburg's economy, and its contribution to the national economy, has grown substantially and performed well on all major indicators compared to Tshwane, Ekurhuleni and Gauteng.
Large numbers of people come to the city to find work, as job creation in Johannesburg has been positive over this period, with more people employed today than in 1996. On average, Johannesburg's workforce has more money and skills than before.
However, more people are living in poverty too, as the growing economy attracts people from more depressed areas, increasing the number of the poor and unemployed.
Economic Growth
Johannesburg is delivering on economic growth: an increase in per capita GDP together with an improvement in the distribution of income are two necessary conditions for an improvement in the average standard of living.
Since 1996 Johannesburg has shown positive real GDP growth and its GDP growth rate has outpaced the national growth rate. This is largely due to the dominance of the fast-growing financial and business services sector in Johannesburg's economy, which has consistently outerformed average growth rates.
When the Johannesburg's growth is compared to that of metros such as Cape Town, Nelson Mandela and eThekwini, the city consistently outperforms its counterparts. Its economy is much larger than any of the others and its Gross Value Added (GVA) in 2004 was R204-billion, compared to R150-billion for Cape Town and R123-billion for eThekwini.
Within Johannesburg, the Randburg district shows the highest GDP growth rate (average five percent) while Soweto shows the lowest (a negative growth). There is no automatic correlation between the income of a region and the district's GDP per capita as people commute to work outside of their regions.
Nonetheless, the significant differences in per capita GDP growth show that centres of economic activity are not located in areas that most need the positive impact and the City is addressing this through a variety of economic initiatives.
Buying power
Johannesburg has a higher than average household income that, combined a strong growth in household income, translates into significant purchasing power.
Measuring the index of buying power (IBP) as a percentage of the national total, Johannesburg's IBP in 2004 was 0.14 indicating that 14 percent of demand for goods and services emanated from Johannesburg. The second largest consumer market was Cape Town, with 11 percent. In comparison, eThekwini commanded only nine percent, Ekurhuleni eight percent, Nelson Mandela Metro three percent, and Tshwane with one percent.
Per capita purchases in the retail sector have increased over 1996's figures in virtually all areas.
Sector growth
Services are crucial to Johannesburg's economy, particularly financial and business services. Trade; transport; manufacturing; finance and community services are more important in the city's economy than in the national economy. Primary and secondary sector activity such as agriculture, mining, electricity and construction is less important to the economy of Johannesburg. The financial and business services sector, which has always been the cornerstone of the City's economy, has become relatively more important over the past seven years. The economy is now more concentrated and its growth more dependant on this sector than at any time in Johannesburg's history.
The services sector is the largest contributor to GVA, showing continuous growth, and continues to absorb labour with employment increasing by 49 percent between 1997 and 2004.
The financial sector in Johannesburg outperforms the national economy and all other metros.
