Q1 GDP growth almost double the consensus forecast

08 Jun 2022

Q1 GDP growth was 3.0% y/y compared with the consensus forecast of an easing to 1.6% y/y from Q4's 1.7% y/y. The growth was due to a 9.0% y/y increase in transport & storage, a 6.2% y/y rise in personal services and a 6.0% y/y gain in internal trade.

April fiscal deficit narrows by 43.7% y/y to R45.2bn

30 May 2022

The April fiscal deficit narrows by 43.7% y/y to R45.2bn as outlays fell by 16.5% y/y to R138.5bn, while revenue rose by 9.1% y/y to R93.3bn despite the Treasury giving up revenue to fund the R1.50/l drop in the fuel levy.

IMF cuts global growth, but leaves SA growth unchanged for 2022

19 Apr 2022

The Russian invasion of Ukraine has forced the International Monetary Fund (IMF) to cut its 2022 global growth forecast to 3.6% from the 4.4% predicted in January 2022 and the 4.9% expected in October 2021. 

The good news for South Africa was that it kept its 2022 GDP growth forecast unchanged at 1.9%, although this is down from the October 2021 forecast of 2.2%. It also changed its view on the current account balance to a positive 1.3% of GDP from a previously negative 0.9% forecast in October 2021. The bad news however is that inflation is now expected to average 5.7% from the 4.5% forecast in October. 

The IMF said that multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential.

It also noted that the war in Ukraine has exacerbated two difficult policy trade-offs: between tackling inflation and safeguarding the recovery; and between supporting the vulnerable and rebuilding fiscal buffers.

Electricity distribution rises despite load shedding

08 Apr 2022

Seasonally adjusted electricity distribution increased by 1.1% in the three months ended February 2022 compared with the previous three months.

In February, electricity distribution slipped by 0.1% y/y due to the load shedding, but six out of nine provinces had positive y/y growth rates.

Non-Eskom local generation accounted for 9.6% of total generation, while imports rose by 12.4% y/y in February.

Q4 2021 employment did not get a boost from November 2021 local government elections

29 Mar 2022

The fourth quarter 2021 Quarterly Labour Force Survey showed that community and social service jobs rose by 73 000 when compared with the third quarter. The vast majority of these jobs are temporary jobs at the Indepedent Electoral Commission to help with the 1 November 2021 Local Government Elections, so they will disappear in the next survey in the first quarter 2022. The bad news is that despite the temporary boost, community and social service jobs are 286 000 less than in the fourth quarter 2020.
The fourth quarter is historically the strongest quarter as the economy gears up for the peak spending period of Black Friday in November and Christmas in December, so the 262 000 increase in the fourth quarter compared with the third quarter is no surprise. 
Statistics South Africa provided some context to the increase of the unemployment rate to a record 35.3% from 35.1% in the third quarter. They said a large number of persons moved from the " not economically active " status to the " employed” and "unemployed" categories between the two quarters. This is then reflected in the "expanded" unemployment rate, which includes discouraged workers that did not look for work in the survey period, which dropped to 46.2% from 46.6%. 
Five provinces recorded a decrease in the expanded unemployment rate. The largest decrease was recorded in the North West (down by 2.3 percentage points), followed by Limpopo (down by 1.7 percentage points), Free State (down by 1.6 percentage points) and Eastern Cape (down by 1.3 percentage points).

January manufacturing and mining data show strong start to 2022

10 Mar 2022

Seasonally adjusted mining production soared by 5.4% m/m in January, while manufacturing production rose by 1.9% m/m. 

This indicates a strong start to 2022 and should continue for the rest of the year as inventories need to be replenished, while mining commodities will gain from demand to replace Russian and Ukrainian commodities such as palladium and nickel.

The mining surge may indicate that the Treasury forecast of a narrowing in the current account surplus to 0.3% of GDP in 2022 after a 3.7% surplus in 2021 may be too conservative.

BankservAfrica Economic Transaction Index (BETI)

09 Mar 2022

Contrary to expectations of substantially slower growth in 2022, the BankservAfrica Economic Transaction Index (BETI) rose by 4.3% y/y in February to reach a record high of 131.1 index points. The BETI is a "now" indicator of economic activity and shows that GDP growth this year may well be better than forecast.

Supporting the rise in economic activity was a rebound in business confidence, which rose to 46 in the first quarter from 43 in the fourth and third quarters. The fieldwork for the first quarter survey was done from 9 to 28 February. The majority of the respondents'' results were submitted before Russia invaded Ukraine resulting in the oil price surging past $120 per barrel. Gold and the other main South African export commodity prices such as for coal and PGMs have also gained from the increased demand as manufacturers try to source non-Russian sourced commodities.

SA GDP Q4 2021

08 Mar 2022

The South African economy grew by a real 5.0% in 2021, just below my forecast of 5.1% made in March 2021 when the Treasury was only forecasting 3.3% growth.

The nominal economy grew by 11.9% in 2021 made up of a 16.2% surge in the gross operating surplus and a 6.0% rise in the compensation of employees.

The Treasury only expects a 3.6% rise in nominal GDP in 2022, which in my opinion is way too low. I expect the nominal GDP to grow near 8%.

The GDP inflation was 6.7% in 2021, while the Treasury expects that to sink to only 1.5% in 2022. 

Although inventories declined by R13.2bn in 2021, this was less than the R45.6bn drop in 2020, so the change in inventories added 0.8 percentage points to GDP growth.

A return to 2019 inventory levels would on its own add 1.3 percentage points  to GDP growth. 

Perception vs Reality

02 Feb 2022

Our perception is shaped by what we see and hear, so I am very concerned about the negative headlines that dominate the financial media, yet I fail to see that they balance this by reporting the good news.

Are you aware that South Africa's steel production surged by 29.5% in 2021, or that the port of Maputo increased its volume handled, most of which are South African coal and magnetite, by 21.3% in 2021 or that the South African government revenue surged by 31.1% y/y in the first nine months of the fiscal year, almost double the 16.6% y/y growth projected as recently as 11 November for the full fiscal year?


01 Feb 2022

The index tracking expected business conditions in six months’ time rose to an almost four-year high of 71.3 points in January from only 51.3 in December, which was the third consecutive decline.

I believe that the rest and recuperation over the December period meant that many business executives could face the New Year with renewed vigour and that is is what fed the surge in expectations. 

The scrapping of the curfew just before New Year’s Eve may have led to the perception that in future there would be fewer restrictions that curtail economic activity.  

Another boost to sentiment may have come from a look around full restaurants and vibrant tourist spots following the unwinding of travel bans by overseas countries such as the UK, which will aid the food and beverages sector, which is one of the most important sectors of manufacturing.

Covid restrictions eased

31 Jan 2022

Presidency statement: A special Cabinet meeting held today, 31 January 2022, has approved changes to the Adjusted Alert Level 1 Covid-19 regulations. This follows meetings of the National Coronavirus Command Council (NCCC) and the President’s Coordinating Council (PCC) which received updates on the management of Covid-19 in South Africa.

The information gathered through the system used by the Department of Health has reported that South Africa has exited the fourth wave nationally.

Based on the trajectory of the pandemic and the levels of vaccination in the country, Cabinet has decided to make the following changes to Adjusted Alert Level 1 with immediate effect:

  • Those who test positive with no symptoms do not have to isolate. 
  • If you test positive with symptoms, the isolation period has been reduced from 10 to 7 days. 
  • Contacts do not have to isolate unless they develop symptoms.

The rationale for these amendments is informed by the proportion of people with immunity to Covid-19 which has risen substantially, exceeding 60-80% in several sero-surveys.

Cabinet also reviewed the resumption of schooling to full-time learning in all schools. Primary, secondary and special schools will return to daily attendance. The regulatory provision for social distancing of 1meter for learners in schools has also been removed.

The Ministers of Health and Basic Education will in the coming days issue directives reflecting on this new approach.

Government commends all South Africans who continue to observe Covid-19 regulations and protocols. We also remind those who are yet to get vaccinated to go for their Covid-19 vaccination and continue observing basic health protocols to prevent the transmission of the virus.