Main Bulletin: The Real Economy Bulletin - Third Quarter 2019
In this edition
GDP growth: For the second time this year, the GDP contracted in the third quarter of 2019. In the past two years, the economy has reportedly shrunk in four quarters, underscoring the effects of the slowdown. Reported GDP growth has also become unusually erratic, with the economy growing reasonably strongly when it was not actually shrinking. Read more.
Employment: Total employment remained virtually unchanged over the past year. Construction lost 160 000 jobs, however, which was offset by growth in other industries. Quarterly figures are hard to interpret because they are not seasonally adjusted. Read more.
International trade: In constant rand, South African exports have increased slightly since 2014, while imports are lower than they were five years ago despite some increases in the past two years. Read more.
Investment and profitability: Private investment recovered over the year to September 2019, with a particularly sharp increase in the second to third quarter 2019. This growth reversed a decline over the previous three years. In contrast, both the government and state-owned corporations (SOCs) saw a fall in investment. Read more.
Foreign direct investment projects: The TIPS FDI Tracker tracks foreign direct investment projects on a quarterly basis, using published information. In the third quarter of 2019, 16 projects were added to the FDI Tracker. Investment values were available for 11 of these projects, and the pledged value came to R13 billion. Read more.
Briefing note: Responding to the economic slowdown: The GDP has for the second time this year slipped into negative territory. Since 2015 the economy has struggled to break free from sluggish performance. An appropriate policy response, however, requires an accurate diagnostic. In particular, we need to understand why growth has slowed steadily since before 2011, not only in South Africa but globally. Read the briefing note online: Responding to the economic slowdown.
Briefing note: SAA by the numbers: In the first week of December 2019, South African Airways (SAA) was put into business rescue.This briefing note provides an overview of its financial position, which left government with no other realistic option. Read the briefing note online: SAA by the numbers.
Main Bulletin: The Real Economy Bulletin - Second Quarter 2019
In this edition
GDP growth: Statistics South Africa reported rapid growth in the GDP in the second quarter, at 0.8% in actual terms – that is, 3% at an annualised rate. The data continue the increased volatility in the GDP data over the past five years. The data also again raise questions about the seasonal adjustment of the quarterly GDP data. Read more.
Employment: After a sharp fall in the first quarter, employment in the real economy was essentially stable in the year to the second quarter of 2019. It is now at the same level it was in 2015. Read more.
International trade: Both imports and exports increased between the first and second quarters. Only marginal growth was observed compared to the same period last year. Read more.
Investment and profitability: Investment fell almost 2% in year-on-year terms through the second quarter of 2019, although it showed a sharp recovery in the past quarter. The decline was due entirely to a fall in public sector investment over the year, with gains in the second quarter of 2019 reflecting a steep improvement in private business investment. Read more.
Foreign direct investment projects: The TIPS FDI Tracker tracks foreign direct investment projects, analysing new and updated projects quarterly. Based on media monitoring, it added 17 projects this quarter – the bulk of which came to completion – while one project was updated. Read more.
Briefing note: Seasonality in the GDP data: According to official Statistics South Africa GDP data, even after adjusting the data to remove seasonal variations, the economy contracted in the first quarter of 2019 in five of the six years from 2014 to 2019. In contrast, the economy reportedly shrank just twice in the second quarter, once in the third quarter, and not at all in the fourth. These data point to an extraordinary shift in the GDP data, with the emergence of an annual cycle in the seasonally adjusted quarterly figures.Read the briefing note online: Seasonality in the GDP data.
Briefing note: Industry Master Plan methodology: The relaunch of industrial policy from early 2019 included proposals for Master Plans for priority industries.This briefing note draws on experience with the development of Master Plans for various sectors as well as the experience of sector strategies in the auto industry to propose a standard methodology for the process. Read the briefing note online: Industry Master Plan methodology. For a more detailed discussion of this topic see TIPS Policy Brief Master Plans for industrial policy.
Briefing note: Brexit and South African trade: The current disarray in British politics centres on the nature of Brexit, with no consensus in sight either on how it should be achieved, or on the UK’s future relationship with the EU. The new Prime Minister has faced strong resistance to a no-deal exit, but it is not clear what proposals could achieve a majority in Parliament, much less support from most British citizens. Because the UK is still one of South Africa’s major trading partners, the final outcome will have significant implications for our own economyRead the briefing note online: Brexit and South African trade.
Briefing note: FDI that supports development priorities – Measuring the “quality” of foreign direct investment: The intensified drive to increase investment raises the question of “quality” of FDI into South Africa. That in turn points to the importance of developing tools or mechanisms to assess FDI, with the aim of maximising its benefits towards achieving inclusive industrialisation. It is important to understand the extent to which projects contribute to South Africa’s development priorities – at a granular level, essentially being able to measure their value-add against developmental priorities. Read the briefing note online: FDI that supports development priorities.
Monitoring for Quarter 4 added 18 projects not previously captured by the FDI tracker. These are a mix of projects announced during the Investment Conference held in October 2018, and announced or taking place before the conference. The quarter rounds out the year with a total pledge value for projects of R174,2 billion from 15 projects, a marked increase from the R47,7 billion recorded in Quarter 3 2018.