The difference between gross and net investment is depreciation – that portion of investment spent to replace worn out capital. The chart below shows that the gap between gross and net investment has been rising in South Africa. Gross and net investment to GDP have fallen by around 4% each since 2010, relative to their pre-2009 averages. The share of new investment in total investment has also fallen, implying that the share going to replacing old capital has been rising. This growing gap signals the need for more investment to sustain long-term economic growth.
