South Africa to dodge the dreaded ‘R-word’
South Africa looks set to avoid a technical recession, with a possible upward “surprise” to full-year growth on the cards.
Next Tuesday, 5 March, Stats SA will release the Q4 2023 GDP figures.
Despite the fears at the start of 2023 that the nation would hit a recession, GDP grew by 0.4% and 0.6% in Q1 and Q2 2023, respectively.
Although minimal, there was at least some growth, which was widely expected to be unattainable following the intense escalation of load shedding in the second half of 2022.
However, in Q3 2023, GDP contracted by 0.2%, with the production side of the economy, especially agriculture, seeing weaker results.
Two consecutive quarterly contractions would see South Africa enter a technical recession, hence the importance of the Q4 figure.
The Bureau for Economic Research (BER) expects a slight quarterly expansion in Q4, meaning that the economy will avoid slipping into a technical recession.
“Our full-year forecast is at 0.6% growth for 2023, but the available high-frequency data suggests that an upward surprise in Q4 and, by extension, the full-year growth figure is possible,” the BER said.
“From the expenditure side, the big uncertainty is around the impact of the intense harbour and rail disruption on net trade and inventories.”
“Looking at GDP from the production side, the big unknown is agriculture – which was a big drag on Q3 growth – and the ‘invisible’ tertiary sectors, where we do not have any high-frequency data.”
Year ahead
Domestic and international economists also expect South Africa’s GDP to grow further in 2024, even if it fails to keep up with population growth.
The Nedbank Group Economic Unit, International Monetary Fund and Deloitte all predict 1% growth in GDP in 2024.
Independent Economist Elize Kruger is slightly more optimistic, with GDP growth of 1.3% in 2024, which should boost the labour market in terms of wage settlements and job creation.
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