South Africa’s economy posted negligible growth in the final quarter of last year. The only bit of good news is that 0.1% real quarterly growth means that a technical recession – two consecutive negative quarters – was avoided.
This is not a hugely important distinction, but it might have dealt yet not another blow to sentiment. The bad news is that growth for 2023 as a whole was only 0.6%. The underlying growth in the domestic economy has therefore been weak, no matter how you look at it. Why?
Chart 1: South African real economic growth
Source: StatsSA
Shed happens
By now everyone knows that loadshedding is a major obstacle to economic growth, and 2023 was a record year for power cuts. The recent Budget noted that more than 16,000 gigawatt hours of power were shed in last year, twice as much as in 2022 which in turn was four times as much as in 2021. A modern economy needs a reliable electricity supply, period. However, modern economies are also flexible and adaptable, and we’ve seen a degree of resilience in the case of South Africa. After all, growth was positive, even if only barely so, and economic activity did not go into reverse.
Click here to read more...
Get the latest issue of FAnews