Johannesburg - There have been mixed reactions to the 0.6% growth in South Africa’s gross domestic product (GDP) over the second quarter of 2023 announced by Statistics SA on Tuesday.
Professor Raymond Parsons, a professor at the NWU School of Business, said that the growth demonstrates a noteworthy degree of resilience in the economy.
“This has mainly been the outcome of more moderate Eskom blackouts in June compared with April and May, together with other mitigating factors that helped to generate better growth figures. Nonetheless, there remains a high degree of volatility in the growth dynamics,” said Parsons.
He said that this is apparent in the wide divergence in growth forecasts for the second quarter of 2023, ranging from 0.1% to 0.7%. It is a reflection not only of the difficulties in quantifying the biggest supply obstacles in the economy, but also of its being a significant source of uncertainty in growth expectations.
“For now, the balance of risks to growth prospects remains on the upside. Load shedding in early September is already back to Level 6, illustrating the extent to which Eskom blackouts hold South Africa’s growth performance hostage. In addition, other economic data, such as retail sales and credit demand, remain weak as a result of higher borrowing costs and rand depreciation, which cut disposable income,” Parsons added.
He said that the economy, hence, still struggles to gain sufficient momentum to sustain a higher rate of job-rich growth.
“And a growth outlook of less than 1.0% for 2023 as a whole – with not much better rates expected in 2024 – has immediate negative implications for fiscal sustainability, as tax revenues fall short of projections and government spending exceeds planned budget levels,” Parsons said.
The DA’s Dr Dion George said that in February 2023, the National Treasury estimated a growth rate of 0.9%, a target that, even though low and uninspiring, was evidently overly optimistic.
“In fact, our economy will not grow at the projected 1.4% over the medium term, given an ongoing government-induced energy crisis. This means that revenue was overstated in the budget and that less money will be available for crucial expenditures on service delivery and social support.”
“The flailing GDP prospects have forced the Treasury to introduce austerity measures. Already, citizens are provided with decrepit state services in water, electricity, education, health, transport, and safety, among other areas,” George said.
He said that over the last 15 years, South Africa's economy has underperformed, with an average annual GDP growth rate of 1.2% since 2008.
“The message from today’s numbers should be that South Africa’s private sector has remained resilient despite the government’s unwillingness to implement the requisite growth-friendly reforms, a testament to what could be achieved with competent governance," added George.
Rise Mzansi national leader Songezo Zibi said that such an economic growth rate is far lower than the 5.4% annual economic growth rate outlined in the National Development Plan as the minimum growth requirement needed to meaningfully reduce unemployment and poverty.
He said South African households continue to struggle under the weight of high prices and the overstretched incomes of those who are fortunate enough to earn in this volatile economic climate.
The Star