On 22 February, the South African National Treasury set out its budget plan ahead of the new fiscal year, which will start on 1 April. After slightly revising its fiscal balance upwards since October 2022, the Treasury now expects a primary surplus starting from the current fiscal year. This performance should gradually improve over the next three years.
After an unprecedented contraction in activity in 2020, the strong rebound in 2021 did not allow South Africa to return to its pre-crisis level of GDP contrary to most emerging economies. In 2022, activity should remain subdued and growth below 2% in the medium term [...]
At year-end 2021, the South African economy had not returned to pre-Covid levels of activity. The upturn in the price of its main export products provides the country with a welcome boost in the short term. This is illustrated by the latest budget forecasts, which are more optimistic than those published in late 2021. Yet structural vulnerabilities persist and are exacerbated by the health crisis [...]
After a record contraction in the economy in 2020, South Africa’s GDP grew by 4.9% in 2021. This was the highest growth rate since 2007. The strong recovery in the first half of 2021 was held back by rioting over the summer and the return of health protection measures in the face of the Omicron variant in the fourth quarter of 2021. The pace of recovery is likely to continue to slow, with GDP forecast to grow by 1.3% in 2022, according to our estimates [...]
South Africa has been severely hit by the Covid-19 crisis, after already several years of very low economic growth and social and political tensions. Real GDP collapsed by 7% in 2020 and public finances have deteriorated significantly. However, South Africa has also benefitted from a strong improvement in its external accounts. The boom in export receipts has supported the rebound in activity and fiscal revenue over the past year [...]
The Covid-19 crisis has hit an economy that had already been in recession since mid-2019. In Q2 2020 (which was the period when lockdown measures were the tightest), real GDP collapsed by 16% q/q seasonally-adjusted. Activity contracted sharply across all sectors in April before reviving slowly. The economic growth rebound from H2 2020 is expected to be difficult. Real GDP is projected to contract by 8.5% in 2020 and should increase by a mere 2.5% in 2021 [...]
The shock triggered by the Covid-19 epidemic has been violent and has hit an already very fragile economy. Over the past five years, economic growth has averaged only 0.8% and the country has slipped into recession since mid-2019. The economic contraction and the deterioration in public finances will be on an unprecedented scale in 2020. Real GDP may well not return to its pre-crisis level before 2025 [...]
Economic growth has averaged only 1% per year since 2015, and weakened further in H1 2019. Exports have suffered from slower world demand growth while structural constraints have weighed heavily on investment, which has declined continuously since early 2018. Major power outages have disrupted activity in 2019: they result from the severe troubles of state-owned company Eskom, and illustrate well the country’s lack of infrastructure [...]
Economic growth is forecast at only 0.4% in 2019, after averaging 1% a year in 2015-2018. The Ramaphosa government has little manoeuvring room to implement reforms, and strong structural headwinds continue to hamper economic activity. Illustrating the country’s enormous lack of infrastructure, major power outages disrupted activity in the first months of the year [...]
South Africa's economic growth disappointed again in Q2 2018. Real GDP fell by 0.7% q/q saar, after already contracting in Q1 2018. In year-on-year terms, real GDP growth slowed to 0.4% in Q2 2018 from 0.8% in Q1.
South Africa's economic growth disappointed in Q1 2018. Real GDP fell by 2.2% q/q saar, after a 3.1% increase in Q4 2017. In year-on-year terms, real GDP growth slowed to 1.5% from 1.9%. The agriculture, mining and industrial sectors all registered a contraction while the services sector stagnated.
Cyril Ramaphosa became South Africa’s new President in February 2018, which created a positive confidence shock. The formation of a new government, the presentation of the 2018-2019 budget and the announcement of structural reforms ended a long period of political uncertainty, restored investor confidence, strengthened the rand and paved the way for improvements in public finances. In the short term, renewed confidence should boost economic growth [...]
South Africa is a middle-income emerging market. Its financial and legal framework is well developed compared with other countries in the region. Structural obstacles have increasingly constrained potential growth, including transport and energy infrastructure bottlenecks, poor human capital and skills shortages, labour market rigidity, corruption, low savings rates and weakening investor confidence. Electricity supply has been unstable since 2019 due to the deep financial difficulties of Eskom, the state-run power company. The COVID-19 crisis further aggravated the economic and social situation. In 2020, real GDP contracted by 7% and the unemployment rate surged to 33%. The rand is floating freely and acts as an effective absorber of external shocks. Currency volatility should therefore remain significant as South Africa is exposed to external trade and financial shocks due to its reliance on commodity exports (mining and metal products account for about 40% of exports) and short-term sources of foreign financing (especially foreign investments in local currency equity and bond securities).
