Old Mutual’s Group Chief Economist foresees continued positive GDP growth for South Africa in Q3 of 2023

(GDP) data for the South Africa’s Gross Domestic Product third quarter of 2023 is poised to be released this today. Old Mutual’s Group Chief Economist, Johann Els offers an optimistic outlook, predicting continued growth despite the challenges faced by the national economy.

In the wake of stronger-than-expected GDP data in the first half of 2023, the South African economy has demonstrated resilience amid significant challenges, including persistent load-shedding and a confidence deficit. The economy, while still grappling with risks, recorded a growth of +0.4% quarter-on-quarter (or +1.6% at an annualized pace) in Q1, followed by a slightly more robust +0.6% in Q2 (or +2.3% annualised).

This growth, surpassing initial apprehensions, is attributed to more efficient use of Eskom’s electricity and the addition of significant private electricity. Notably, the economy now utilizes 25% less Eskom electricity than in 2000 to produce the same GDP level, debunking the direct correlation between load-shedding levels and GDP impact.

Looking ahead, Johann Els anticipates Q3 to maintain growth. Although the forecast faces risk due to the absence of high-frequency data for all GDP components, indicators such as improved electricity production, ongoing recovery in agricultural output, and stronger retail sales suggest a positive trajectory. The Q3 GDP growth is estimated to be in the range of +0.2% to +0.4% quarter-on-quarter, translating to an annualised growth of +1.0% to +1.6%.

These projections align with Johann’s full-year GDP growth expectations of above 1%, indicating a commendable economic performance in 2023, especially considering the challenges at the start of the year.