{"id":621101,"date":"2022-08-30T14:12:06","date_gmt":"2022-08-30T12:12:06","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=621101"},"modified":"2022-08-30T14:12:06","modified_gmt":"2022-08-30T12:12:06","slug":"south-africa-is-driving-at-60-while-the-rest-of-the-world-is-going-100","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/621101\/south-africa-is-driving-at-60-while-the-rest-of-the-world-is-going-100\/","title":{"rendered":"South Africa is driving at 60 – while the rest of the world is going 100"},"content":{"rendered":"

South Africa’s economic growth is slowing once more, with low economic growth levels projected over the medium term standing in stark contrast to a healthier global economy, says financial services firm PwC.<\/p>\n

Current forecasts for real GDP growth for South Africa stand at 2% this year, with expectations that growth will converge around 1.5% per annum over the long term.<\/p>\n

This is the country\u2019s potential economic growth rate, given current fundamentals and structural constraints, PwC said. In turn, the group expects the global economy to grow at a healthier long-term rate of 2.6% per annum.<\/p>\n

“If these growth rates could be translated into the speed at which a car travels, South Africa would be driving at 60 km\/h while the global average is above 100 km\/h.”<\/p>\n

PwC said that despite the economy bouncing back in 2021 as GDP expanded to 4.9% – even before the Russian invasion of Ukraine sent shockwaves through the global economy – local economic growth was expected to moderate to a significantly lower level.<\/p>\n

When compared to E7 emerging economies, South Africa is being outperformed, showing that there are opportunities for growth through engagement with these areas.<\/p>\n

The E7 includes some of the largest emerging markets, like Brazil, China, India, Mexico and Turkey – many with growing middle classes and resource wealth to drive their future economic development.<\/p>\n

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Emerging economies are forecast to grow by a healthier 3.4% this year and 4.2% next year. This group\u2019s long-term growth outlook is higher at 4.5% per annum despite the inclusion of Russia within this cohort, said PwC.<\/p>\n

“If South Africa is cruising at 60 km\/h over the long term, this group would be speeding ahead at 180 km\/h.”<\/p>\n

The G7 developed economies are expected to record real GDP growth of 2.4% in 2022 and 1.6% in 2023 as their post-pandemic recoveries continue, said PwC.<\/p>\n

The long-term growth outlook for this grouping is an average expansion rate of 1.4% p.a. \u2014 very similar to South Africa\u2019s long-term trend.<\/p>\n

Five factors<\/strong><\/p>\n

PwC listed the following key international factors that are having an effect on the local economy:<\/p>\n