Main Bulletin: The Real Economy Bulletin - Third Quarter 2018 

In this edition

GDP growth: South Africa’s third quarter GDP grew by an estimated 0.6% in the second quarter of 2018, reversing the contraction experienced in the first and second quarter of the year. Significant differences emerged between sectors, however, with growth in agriculture and manufacturing offset by declines in mining and construction. Read more.

Employment: Total employment reportedly increased by 190 000 or 1.3% from the third quarter of 2017 to the third quarter of 2018, despite the erratic growth in the GDP. Still, manufacturing lost over 20 000 jobs in the year, continuing a trend of stagnant employment since the 2008/9 global financial crisis. In contrast, construction reportedly gained 140 000 jobs over the year, despite the continued decline in its output. Most other new jobs emerged in business and social services. Read more.

International trade: Both exports and imports surged from the third quarter of 2017 to the third quarter of 2018 in rand terms, largely reflecting the stronger US dollar and, in the case of imports, the increase in the global oil price. As a result of these factors, the trade surplus fell sharply. Read more.

Investment and profitability: In the year to the third quarter 2018, both private investment and general government investment remained essentially flat. State-Owned Corporation (SOC) investment, however, fell by 1.1%, with a decline of 3.5% in the third quarter alone. Read more.

Foreign direct investment projects:  Eleven projects were added to the TIPS Foreign Direct Investment (FDI) Tracker, while five existing projects had major updates. The total value of announced investments this quarter was R47.7 billion, over twice as high as the total for the first half of the year. Read more.

Briefing note: Investment Conference 2018 - Evaluating the pledges: The South Africa Investment Conference 2018, held between the 26th and 27th of October, was headlined by the announcement of R290 billion in new pledged investment. Achieving that target would contribute almost a third to President Cyril Ramaphosa’s five-year US$100 billion target for new investment. Understanding what lies behind this figure is, however, more of a challenge. Read the briefing note online: Evaluating the pledges.

Briefing note: Medium Term Budget Policy Statement (MTBPS) - Implications for industrial development: In the 2018/19 financial year, the South African state plans R1.67 trillion in expenditure. Of this, R200 billion (or 12%) of the budget is earmarked for supporting economic development. Of this, the lion’s share goes for infrastructure, mostly transport, with the rest supporting industrialisation and exports, agriculture and rural development, job creation and labour affairs, innovation, science and technology.Read the briefing note online: Medium Term Budget Policy Statement Implications for industrial development.

Briefing note: The Job Summit and inclusive industrialisation: The Presidential Job Summit, which took place under the auspices of NEDLAC on 4 October 2018, included several initiatives that potentially have substantial implications for inclusive industrialisation and potential for much-needed job creation in South Africa. Read the briefing note online: Job Summit and inclusive industrialisation.

Quarter 3 2018 saw a continued narrowing of the trade balance, with a very slim surplus of 0,3%. Year-on-year import growth of 12,8% was more than double export growth of 6% over the same period.
Exports were buoyed by strong growth by the automotive sector, and iron and steel; as well as by a mild recovery in commodity prices for gold and platinum.

This paper argues that adopting a “developmental regionalism” approach to trade integration provides the best prospects for the African Continental Free Trade Area (AfCFTA) to catalyse the process of transformative industrial development, cross-border investment and democracy, governance, peace and security in Africa. It also looks at the progress being made by African countries and the continent in implementing each of the four pillars of this approach.

This paper was written in celebration of the significant contribution to African integration made by Chief Olu Akinkugbe. 

Dr Faizel Ismail also presented the Keynote Address at the Olu Akinkugbe Business Law In Africa Fellowship Conference held at the Lagos Business School on 28 November 2018.

A 'developmental regionalism' approach to the AfCFTA: In celebration of the 90th birthday of Chief Olu Akinkugbe CFR CON

The TIPS FDI Tracker monitors inward foreign direct investment projects. Quarters 1, 2, 3 and 4, 2018 are now available online. See FDI Tracker.

Business Day - 20 November 2018 by Neva Makgetla (TIPS Senior Economist)

Read online at Business Day.

Or read as a PDF.

Engineering News 16 october 2018 by Rebecca Campbell

Read online

Business Day - 6 November 2018 by Neva Makgetla (TIPS Senior Economist)

Read online at Business Day

Or read as a PDF.

Daily Maverick - 31 October by Ferial Haffajee

Read online

Politics Web - 15 October 2018 by Andries Nel

Read online

Monitoring for Quarter 3 identified 11 projects not previously captured by the FDI tracker; while five existing projects were updated during the quarter, with many of them coming to completion. Projects this quarter had a total pledged value of R47,7 billion, an increase from the R21,1 billion recorded in the previous quarter.