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The Real Economy Bulletin - Fourth Quarter 2016

Main Bulletin: The Real Economy Bulletin - Fourth Quarter 2016

In this edition:

Quarterly GDP growth: South Africa’s GDP fell by 0.08% over the past quarter, driven mostly by a decline in the real economy, above all mining. Mining contracted by 3,0%, manufacturing by 0,8%, and agriculture by 0,1%. These trends contributed to the continued slowdown in growth, which came to just 0,3% for 2016 as a whole. Read more.

Employment: Employment showed the typical seasonal bump from the third to the fourth quarter, growing 250 000 overall. Year-on-year figures, which compensate for seasonal fluctuations, show more modest growth, at 50 000. That indicates that employment growth is slowing with the GDP, although it has levelled out in mining after substantial declines. Manufacturing employment has remained virtually unchanged since 2013, although the rest of the economy has seen significant jobs growth. Read more.

Trade: The strengthening of the rand over 2016 reduced export revenues and made imports more competitive with local producers. As a result, despite growing manufactured exports in dollar terms, in rand revenues exports dropped. Still, overall South Africa ended the year with a surplus on the balance of payments, after running trade deficits from the end of the commodity boom through 2012. Read more.

Investment and profitability: Manufacturing saw a sharp rise in reported profits in the year to the third quarter 2016, but it largely results from a once-off restructuring in beverages. In contrast, the return to profitability in mining appears to represent a turnaround from the end of the commodity boom. Nonetheless, the first three quarters of 2016 saw falling investment in both the public and private sector. Read more.

Major new projects: This section summarises major new FDI projects, drawing on a new TIPS database, as well as domestic initiatives in the real economy. Read more.

Briefing note - Scenarios for US protection: The election of the first explicitly protectionist American president in decades has injected a deep sense of uncertainty into a global trading system already mired by paralysis in the World Trade Organization (WTO) and fractures in the EU. Read the briefing note online: Scenarios for US protection.

Briefing note - The 2017/8 budget and industrialisation: The 2017/8 budget, announced in March, reflects the commitment to fiscal consolidation, which in turn seems likely to slow overall growth. In this context, it imposes real cuts on the budget of the Department of Trade and Industry (the dti) in the coming three years, especially on incentive programmes. Read the briefing note online: The 2017/8 budget and industrialisation.