The Real Economy Bulletin - Fourth Quarter 2022

Main Bulletin: The Real Economy Bulletin - Fourth Quarter 2022

In this edition

GDP growth: The economy shrank by 1.3% in the fourth quarter of 2022. Arguably that very poor outcome actually showed surprising resilience, given extraordinarily heavy loadshedding combined with falling export prices. Manufacturing contracted by just under 1%, but agriculture and mining both fell by 3%. Since the pandemic, quarterly GDP growth has turned markedly volatile. Read more.

Employment: Despite the decline in the GDP, total employment climbed by almost 160 000 in the fourth quarter of 2022, for a net gain of 900 000 compared to the same quarter in 2020. Still, the economy remained 500 000 jobs short of its pre-pandemic total. Most of the job losses affected clerical and skilled production workers, while highly qualified people gained over 2019. Manufacturing saw a second quarter of modest growth, although not enough to catch up with its pre-pandemic levels. Read more.

International trade: The trade surplus narrowed by 85% in the fourth quarter of 2022, mostly because of an 11% fall in the value of mineral exports. The main reason was a decline in international prices, notably for iron ore and platinum, compared to the fourth quarter of 2021. Outside of coal, the commodity price spike following the Russian invasion of Ukraine proved short-lived. Read more.

Investment: Investment this quarter increased by 1.3% relative to the third quarter of 2022, nudging the investment rate up to 14.7% of the GDP – still well below the level normally considered adequate for sustained rapid growth. Government investment climbed 2.5% (offset by the fall in government consumption, which mainly covers social services and grants) and private investment 1.5%. State-owned companies, however, cut their capital spending by 2.3%. In 2022, total investment in manufacturing was down by a third compared to 2019. Read more.

Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published investment information.  Seventeen projects were added to the Tracker this quarter. The pledged investment value recorded for the quarter came to R9.8 billion from nine projects. The other projects did not report investment values. A total of 19 pre-existing projects were updated in the Tracker, largely related to the Renewable Independent Power Producer Procurement Programme. Read more.

Briefing Note: The 2023/4 budget and industrial policy - by Neva Makgetla. The recent 2023/4 national budget mainly takes forward the rather austere strategies adopted in 2022/23. To analyse the impact on inclusive industrialisation, this note looks at three aspects: the overall fiscal approach; broad support for industrialisation; and the allocation to the dtic. Read the Briefing Note online: The 2023/4 budget and industrial policy.

Briefing Note: Loadshedding and the economy - by Rapula Diale and Neva Makgetla. Over the past decade, loadshedding has increasingly affected the economy, due to an aging and poorly maintained national electricity system. According to the Reserve Bank, six to 12 hours of loadshedding costs the economy between R204 million and R899 million. Despite these enormous costs, loadshedding increased dramatically through the first quarter of 2023, and the national grid seems unlikely to recover any time soon. Read the Briefing Note online: Loadshedding and the economy.

Briefing Note: The small business REB - by Neva Makgetla and Lesego Moshikaro. TIPS is publishing the latest edition of its special REB on the State of Small Business, dedicated to an analysis of the available data on small business. This Briefing Note highlights some key findings. Read the Briefing Note online: The small business REB.