GDP growth figures: The good and the bad

by Raymond Parsons: Professor at the NWU School of Business & Governance and a former special policy adviser to Busa.
The good news is that South Africa has, after all, narrowly avoided a ‘technical recession’ (two successive quarters of negative growth) by nonetheless registering a scant GDP growth rise of 0.1% in 4Q 2023. This followed on a -0.2% GDP decline in 3Q 2023. There were fears in some quarters that the fourth-quarter growth figures might also be negative.

The bad news is that, on the basis of economic growth just now being 0.6% for 2023 as a whole, on present trends the economy is likely to see only about 1% growth this year. This is more or less in line with most recent growth forecasts but is still simply too low to meet South Africa’s socioeconomic challenges.

A red flag continues to be the further 0.2% decrease in gross fixed capital formation in 4Q 2023. This confirms the negative trend in private fixed investment in 2023, as indicated by the recent Nedbank Capital Projects Listing survey. Higher fixed investment levels are needed to drive job-rich growth in the period ahead and underscores the importance of investor confidence.

The message remains that these negative trends are reversible, and investor sentiment can be strengthened if energy security can be assured, logistical obstacles resolved, and policy uncertainty reduced. The more rapidly promised economic reforms can be implemented, the better the growth prospects will be for the economy.

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