Real Economy Bulletin - Fourth Quarter 2019

Main Bulletin: The Real Economy Bulletin - Fourth Quarter 2019

In this edition

Trends in GDP growth: GDP growth in 2019, at 0.2%, was the lowest since the global financial crisis in 2008/9. The economy reportedly contracted in the last two quarters of the year as well as the first quarter. The slowdown reflects a combination of demand-side factors, resulting from slower global growth and a pro-cyclical (although far short of austerity) fiscal and monetary stance, combined with the supply-side drag of Eskom loadshedding and increasingly harsh and frequent droughts as the climate crisis intensifies. Read more.

Employment: Construction employment continued its downward trend, with the loss of 130 000 jobs, or 9% of its total workforce, in the year to the fourth quarter of 2019. Manufacturing also saw net job losses in this period. In contrast, agriculture gained 36 000 jobs. The rest of the economy reportedly created half a million new employment opportunities. Read more.

International trade: From the third to the fourth quarter of 2019, South Africa’s exports and imports fell in both constant rand and US dollar terms.  The balance of trade improved because of the relatively sharp fall in imports, largely due to slower economic growth. Read more.

Investment and profitability: Investment was generally depressed in 2019, mostly as a result of the decline in public investment. Private investment fell in the final quarter, although it increased over the year. Profitability continued to fall in manufacturing and dropped in construction. Mining saw some improvement, mostly because the value of its assets fell even faster than its profits. Read more.

Foreign direct investment projects: The TIPS FDI Tracker tracks foreign direct investment projects on a quarterly basis, using published information. The total investment value captured this quarter was R52.4 billion. Read more.

Briefing note: Coronavirus - impact of an economic slowdown in China on the South African economy:  The global economy is facing an economic slowdown as a result of the coronavirus disease (COVID-19) that began in China and had spread to at least 50 other countries by late February. China is now the world’s second biggest economy, and South Africa’s largest single trading export destination as well as its largest export market. With the situation changing rapidly, it is important that South Africa keep track of the developments and undertake contingency planning to prepare for the impacts on the economy and on jobs. Read the briefing note online: Coronavirus - impact of an economic slowdown in China on the South African economy.

Briefing note: Budget 2020 and funding for industrial policy: With a depressed economy, the 2020 budget was bound to be a delicate balancing act. Entitled Consolidation, Reform and Growth, it acknowledges a weak economic outlook, low growth, tax revenue shortages, higher debt service costs and concerns with public finances and fiscal deterioration. Read the briefing note online: Budget 2020 and funding for industrial policy.