Whether South Africa is pushed into a full recession in 2023 or not, the country’s economy is in trouble, say economists at the Bureau for Economic Research (BER).
The country was hit with a barrage of bad news last week – starting with a lackluster cabinet reshuffle, moving on to a nasty surprise in the quarterly GDP figures, and ending with a credit rating outlook shift from S&P Global.
While these were the main low-lights of the week, other bad news was mixed in – business confidence took a hit, and South Africa’s current account balance reverted to a calendar year deficit for the first time in three years during 2022.
However, the biggest indicator of South Africa’s economic troubles is the GDP data, which came in three times worse than expected. While market consensus expected South Africa’s Q4 data to show a contraction of 0.4% for the period, the final figure came in at -1.3%.
Seven out of the ten major sectors shrank in the last three months of 2022. In terms of the large quarterly GDP decline, the biggest drag came from the finance sector – down by 2.3% and shaving off 0.6% pts – due to lower fee income in the commercial banking sector, lower value added in the insurance sector and reduced volumes of bond and financial derivatives trading.
“In terms of the demand side of GDP, exports made the biggest negative contribution to real GDP in Q4 (-1.4% pts), in part due to logistical constraints caused by the more than ten-day Transnet strike during October,” the BER said.
“Persistent power outages also took a heavy toll on industrial activity in 2022Q4 with over half of Q4’s load-shedding at stage 3 and above,” it said.
Full Article… Bussinestech
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