{"id":699713,"date":"2023-06-28T15:36:43","date_gmt":"2023-06-28T13:36:43","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=699713"},"modified":"2023-06-28T15:37:09","modified_gmt":"2023-06-28T13:37:09","slug":"south-africa-dodged-the-big-r-but-its-not-enough","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/699713\/south-africa-dodged-the-big-r-but-its-not-enough\/","title":{"rendered":"South Africa dodged the ‘big R’ – but it’s not enough"},"content":{"rendered":"\n

South Africa is not in recession, says financial services company PwC.<\/p>\n\n\n\n

While business leaders are (justifiably) downbeat about the country’s economic growth outlook and fear technical recession – two consecutive quarters of GDP decline – this has not materialised, the group said.<\/p>\n\n\n\n

In its latest Economic Outlook report, PwC cited its Global CEO Survey that found that six out of ten CEOs in South Africa expected a decline in economic growth this year, both locally and globally. <\/p>\n\n\n\n

The economy, however, in the first quarter of 2023 was 0.2% bigger, year on year.<\/p>\n\n\n\n

The most recent GDP data from StatsSA in early June showed that the local economy grew by 0.4% quarter-on-quarter during the first quarter of this year, avoiding technical recession following a 1.1% quarter-on-quarter decline in the quarter before.<\/p>\n\n\n\n

However, longer-term GDP numbers are still at risk. Other economists and finance groups have warned that the economy could still slip into the negatives on a full-year basis<\/strong><\/a>.<\/p>\n\n\n\n

Even PwC’s own scenario modelling has flagged this possibility, with the group’s downside scenario seeing overall GDP declining by 0.5%.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

While any economic growth is positive, PwC noted that it is far from being in a healthy position.<\/p>\n\n\n\n

Specifically, 0.2% year-on-year growth is still far away from the numbers needed to support job creation and curb unemployment in the country, while salaries in real terms are in decline.<\/p>\n\n\n\n

Over the same period (Q1 2023), South Africa’s unemployment rate increased by 0.2 percentage points, while consumer price inflation remained – and remains – outside the central bank\u2019s target range of between 3% and 6%.<\/p>\n\n\n\n

According to PwC, this signifies stagflation<\/strong>, which will inevitably detract from investor and business sentiment.<\/p>\n\n\n\n

Similar to depressed CEO outlooks, the RMB\/BER Business Confidence Index dropped to 27 in the second quarter of 2023 – a similar pattern to that seen during the pandemic.<\/p>\n\n\n\n

PwC added that the Whole Economy S&P Global South Africa PMI for May 2023 declined to its lowest reading in almost two years and recorded a decline in the health of the private sector for the third successive month.<\/p>\n\n\n\n

The company said the S&P reading of 47.9 in May (down from 49.6 in April) also reflects a decline in private sector activity during the month. S&P Global pointed to key issues like load-shedding and production cost inflation as the primary downward drivers.<\/p>\n\n\n\n

The Bureau for Economic Research (BER) noted this month that the current challenging business environment is not conducive to growth in non-energy capital expenditure or meaningful employment creation. This, in turn, hurts the country’s long-term productivity<\/p>\n\n\n\n

The graph below shows the depressed sentiment of CEOs in South Africa:<\/p>\n\n\n

\n
\"\"<\/a><\/figure><\/div>\n\n\n

The possible bounce back<\/strong><\/p>\n\n\n\n

PwC said the economic outlook for 2024 looks more positive – especially if private energy investment results in less frequent load shedding.<\/p>\n\n\n\n

“The South African Reserve Bank (SARB) said in May it expected 280 days of load-shedding in 2023 and warned that power cuts to reduce real GDP growth this year by two percentage points. Our baseline view is for real GDP growth of only 0.3% this year.” <\/p>\n\n\n\n

“The outlook for 2024 is somewhat better, based on the premise that South Africa will this year see a turning point (peak) in the extent of load-shedding,” PwC said.<\/p>\n\n\n\n

There has been major private investment seen and planned in renewable or alternative power supplies. Operation Vulindela, for example, is tracking a pipeline of 10,000MW in private-sector energy generation projects.<\/p>\n\n\n\n

“The positive impact that this will have on the power supply in the country and on individual business operations makes for a more positive economic growth outlook for 2024 and beyond. We expect the economy to grow by 0.9% next year or as high as 1.3% under an upside scenario,” said PwC.<\/p>\n\n\n\n

\n\n\n\n

Read: Red flags for food security and pricing in South Africa: PwC<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

PwC’s latest Economic Outlook Report reveals slight upsides for economic growth to come.<\/p>\n","protected":false},"author":10,"featured_media":682059,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[26,2407],"class_list":["post-699713","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-headline","tag-pwc"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/699713","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=699713"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/699713\/revisions"}],"predecessor-version":[{"id":699793,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/699713\/revisions\/699793"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/682059"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=699713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=699713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=699713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}