/ 4 March 2024

Signs point to SA having avoided a technical recession

Load Shedding Eskom
A general view shows trails of lights from passing vehicles in Braamfontein, Johannesburg, which is submerged in darkness due to load-shedding

South Africa’s economy is expected to have made modest gains in the fourth quarter of 2023, compared to the third quarter, when the GDP contracted 0.2%.

According to economists, the country’s GDP will have got a boost amid less severe load-shedding during the latter part of 2023.

Nedbank’s economists — who have estimated that real GDP growth for the fourth quarter will be around 0.3% — said blackouts were 45% lower during the period as a result of a sharp decline in the demand for energy over the festive season. 

The bank’s economists said although there was an improvement in load-shedding over the fourth quarter, the underlying energy problem remains unresolved. They said subdued power outages throughout the year are to be expected due to increased planned maintenance and further plans to expand the grid.

Operational failures on the part of Transnet are also expected to continue to hamper sectoral growth over the year, Nedbank said. Although plans are in place, and backlogs at the ports have been reduced, it will take until at least 2025 to start seeing meaningful improvement, according to the bank.

The Bureau for Economic Research (BER) said it anticipates a slight quarterly expansion in the fourth quarter and this means the economy is set to avoid slipping into recession. 

The BER said the agricultural industry is the “big unknown” as it was a drag on GDP growth for the third quarter, having declined by 9.6% due to several headwinds including the outbreak of avian flu and the floods in the Western Cape. 

The BER’s 2023 GDP growth forecast is 0.6%, in line with the treasury’s forecast. 

In the budget, which was tabled by Finance Minister Enoch Godongwana last month, the treasury said South Africa’s 2023 GDP growth estimate had been revised down due to widespread power cuts, operational and maintenance failures in freight rail and at ports and high living costs.   

In terms of expenditure, there is anxiety about the impact of the harbour and rail disruption on net trade and inventories, the BER said. These trade dynamics could also affect the fourth quarter current account data, which will be released by the South African Reserve Bank on Thursday. 

South Africa’s current account unexpectedly narrowed in the third quarter of 2023 to R19.3 billion from a revised R185.2 billion in the second quarter.