The Real Economy Bulletin - Second Quarter 2018

Main Bulletin: The Real Economy Bulletin - Second Quarter 2018  

In this edition

GDP growth: South Africa’s GDP shrank by an estimated 0.17% in the second quarter of 2018. Excluding agriculture, however, the economy essentially stagnated over the quarter. Mining expanded by 1.2%, while manufacturing and the rest of the economy excluding agriculture remained essentially unchanged. The second quarter of reported decline in the GDP means that the economy officially entered a recession. More important, however, is that growth has been slow and uneven since 2014. Read more.

Employment: Despite the slowdown in the GDP, employment in both the real economy and the economy as a whole reportedly increased by around 1% from the second quarter of 2017 to the second quarter 2018. Manufacturing, however, lost some 55 000 jobs, or 3% of its total employment, over this period. Manufacturing typically sheds jobs in the second quarter, in a marked seasonal pattern, but at 110 000 the fall in the second quarter of 2018 was far larger than the norm. Read more.

International trade: The trade balance shows an improvement from the deficit seen in the first quarter of 2018. In the second quarter, the trade balance rose to a surplus of R17 billion. However, this is R9 billion (or 35%) less than the trade surplus in the second quarter of 2017. Read more.  

Investment and profitability: Overall, investment declined, entirely due to a fall in investment by government and state-owned corporations. In contrast, in the year to the second quarter of 2018, private investment increased by 0.9%. Read more.

Foreign direct investment projects: Three new projects were reported in the TIPS Foreign Direct Investment (FDI) Tracker in the second quarter of 2018, with a total value of R11 billion. Read more.  

Briefing note: Responding to the slowdown: The figures for general government consumption and for public investment point to the pro-cyclical impact of the current fiscal policy, combined with consolidation at the state-owned corporations over the past year. The challenge is to return to a counter-cyclical stance given the limited fiscal space left by the relatively high deficit. Ideally, a stimulus package should be funded through off-budget sources. Read the briefing note online: Responding to the slowdown.

Briefing note: The President's investment drive: As part of the renewed push towards industrialisation, job creation and faster levels of economic growth, President Cyril Ramaphosa set an ambitious target of attracting US$100 billion in new investment within five years. Read the briefing note online: The President's investment drive.

Briefing note: Farming 4.0 - Implications for South Africa? Agribots, aquaponics, smart collared cows, fenceless farming and e-shepherds, and aero/vertical farming are some of the emerging technologies that fuse the digital, physical, automated and scientific systems in the new agricultural revolution, sometimes called “Farming 4.0”. The challenge is to achieve sustainable food security systems that incorporate scale production with affordable and cost-effective farming methods and environmental protection. Read the briefing note online: Farming 4.0 - Implications for South Africa.

Briefing note: Water and sanitation markets - An opportunity for industrial development? The evolution of the water and sanitation market in South Africa and globally opens opportunities for industrialisation. For this reason, the sector has been identified by the Industrial Policy Action Plan as a potential driver, notably through the establishment and growth of locally-designed and manufactured products and services. Read the breifing note online: Water and sanitation markets: An opportunity for industrial development?