Displaying items by tag: Real economy

Main Bulletin: The Real Economy Bulletin - Second Quarter 2020

In this edition

The GDP: As expected, the GDP dropped sharply, by 16% in seasonally adjusted terms, in the quarter ending in June 2020 as a result of the COVID-19 pandemic. Economic activity crashed in April, during the strict Level 5 of the lockdown. The gradual relaxation in restrictions since then have seen a bounce back to near pre-pandemic levels. Still, COVID-19 continues to pose a threat, limiting recovery especially in tourism and recreational services even in the absence of regulations. Moreover, long-standing structural challenges and declines in major trading partners will slow recovery. Read more.

Employment: Because it is difficult to undertake household surveys during a pandemic, the Quarterly Labour Force Survey has been delayed until late October. As a result, there are no official figures for second quarter employment. Read more.

International trade: The pandemic brought a sharp slowdown in global trade as a result of blockages to transport as well as falling international demand. For South Africa, the second quarter of 2020 saw a strong decline in goods exports, combined with an even stronger slump in goods imports. Only agricultural exports performed well, increasing by 14.2% in dollars and, thanks to depreciation, by 38% in constant rand terms. Read more.

Investment: Investment tumbled in the second quarter. Monthly data are not available, however, so it is not clear if there was any recovery over the quarter. Private investment fell by a fifth, investment by state-owned companies by a third, and general government investment remained almost unchanged. As a result, in the second quarter of 2020 investment fell to 16% of the GDP from 17% in the first quarter. That is the lowest investment rate since 2010. Read more.

Foreign direct investment projects: The TIPS FDI Tracker tracks foreign direct investment projects on a quarterly basis, using published information. Eight projects were recorded this quarter, and two projects were updated in status. The total quantum of new investments recorded was approximately R2.6 billion, from six projects. Read more.

Briefing note: Stimulating consumer spending post COVID-19 lockdowns: Consumption spending by households is an important driving force of an economy. In 2019, household consumption spending accounted for 61% of the R5.1 trillion expenditure on gross domestic product. Spending on essential goods and services such as food, transport, health and education accounted for 62.3% (or R1.9 trillion) of final household consumption. Spending on non-essentials like recreation and culture as well as restaurants and hotels accounted for 7.2% (or R219.6 billion) of final household consumption. However, in 2020, the COVID-19 lockdown has and will continue to negatively impact consumer spending in the absence of alternative incomes or financial resources for those consumers. Read the briefing note online: Stimulating consumer spending post COVID-19 lockdowns.

Briefing note: Unblocking the potential of South African green hydrogen in trade: Globally, countries are mobilising sizeable resources towards dealing with the climate crisis, and with the COVID-19 pandemic many countries and regions have attached sustainability criterion to their recovery packages. EU Member States, for example, have attached strict mitigation regulations to COVID-19 rescue packages and state recovery support in sectors with limited options for decarbonisation, such as aviation. Further, as part of the transition to sustainable production, trade barriers against high-carbon exporters through policy tools such as border carbon adjustments are expected from large trading blocs such as the EU from as early as 2023. The climate policy responses by countries to changing trade policies differ, however, what is certain is that the nature of trade, production and investment will change in this transformation. Read the briefing note online: Unblocking the potential of South African green hydrogen in trade.

Published in Quarterly Bulletin

Main Bulletin: The Real Economy Bulletin - First Quarter 2020

In this edition

Trends in GDP growth: The first quarter of 2020 saw South Africa enter a third straight quarter of economic decline. But 2020 began a qualitative shift in the national and global economy. In the second half of 2019, the downturn was driven largely by the continued stagnation in commodity prices. From January to March 2020, however, the economy was increasingly weighed down by the impact of the COVID-19 pandemic. As a result, the South African economy is expected to shrink by around 7% in the coming year, while the global economy will fall by 5%, and by 6% if China is excluded. Read more.

International trade: South African exports in January and February showed signs of a recovery compared to the previous year, but they began to fall in March as the effects of the pandemic widened. Read more.

Employment: Although the year to the first quarter of 2020 saw some jobs growth, employment fell sharply during the lockdown, and has recovered only slowly since then. In the year to March 2020, employment climbed by 90 000 jobs. But the available data suggest that over a third of all formal private-sector employees were unable to work in April, during Level 5 of the lockdown. Depressed international and domestic demand mean that the reopening of the economy will not restore all of those jobs. Read more.

Investment and profitability: Investment and profitability data are only available through the end of 2019. The available indicators point to a liquidity crisis across business as incomes fell to near zero in April and demand has only come back slowly as the lockdown has eased, while many companies face substantial start-up costs. Read more.

Foreign direct investment projects: The TIPS FDI Tracker tracks foreign direct investment projects on a quarterly basis, using published information. Twenty-four projects were recorded this quarter with an investment value of about R40.7 billion. Read more.

Briefing note: Coronavirus – The impact of Covid-19 is likely to exacerbate pre-existing inequalities: The lockdown regulations in response to the COVID-19 health crisis have disrupted economic activity, the organisation of work, and communities. COVID-19 has presented itself as a health crisis, burying itself in a host of pre-existing inequalities and has manifested as an economic crisis in South Africa. This briefing note aims to consider the impact of the lockdown regulations on different groups in society from a gender perspective. Read the briefing note online: Coronavirus – The impact of Covid-19 is likely to exacerbate pre-existing inequalities.

Briefing note: Coronavirus – South Africa’s banking system response to SMMEs: With the economic impact of COVID-19 likely to be worse than the 2008 financial crisis, the risk to the economy is a significant reduction in credit and less financial liquidity. The impact would be that small businesses in particular would struggle with cash flow in addition to the myriad of other problems in the post COVID-19 economy, including a drop in consumer credit, constrained demand, and disruptions of supply chains. Have there been lessons learned from a recent financial crisis, and a resultant shift in the approach taken during this economic crisis by the South African banking system? Read the briefing note online: Coronavirus – South Africa’s banking system response to SMMEs.

Published in Quarterly Bulletin

The South African economy is affected by the COVID-19 pandemic through:

  • The sharp fall in growth initially in China and then in Europe and the US as a result of measures to contain the virus; and
  • The increasing pressure to exercise social distance and lock down households and businesses to slow the spread of COVID-19, including in South Africa (from 26 March 2020) as well as all its major trading partners.

These measures brought an extraordinarily sharp decline in global production and
employment, especially in the US and Europe, over the past month. The result will likely be a global recession, with very uncertain prospects for recovery despite the adoption of extremely large stimulus packages in the US and much of Europe.

This briefing note first outlines the progress of the pandemic internationally and in South Africa. It then summarises key economic consequences, which have led to (widely varying) projections for global and South African growth. A final section reviews international and South African economic policy responses to the sharp slowdown.

The economic impacts of COVID-19 are changing rapidly. Information in this briefing note is valid as of 26 March 2020.

Download a copy or read the policy brief online.


  • Year 2020
  • Author(s) Neva Makgetla, Nokwanda Maseko, Kudzai Mataba (TIPS)
Published in Policy Briefs

Main Bulletin: The Real Economy Bulletin - Fourth Quarter 2019

Data sheer: Data Second Quarter

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.

Published in Quarterly Bulletin

This policy brief attempts to identify potential risks for South Africa as a result of the COVID-19 epidemic. To that end, it first provides a brief overview of the developments since the first cases of COVID-19 were reported in China. It then focuses on trade, identifying South Africa’s top exports to and imports from China. On that basis, it outlines the potential impact on major exports and on the supply of intermediate inputs as well as consumer goods.


  • Year 2020
  • Author(s) Nokwanda Maseko, Rhulani Hobyani, Neva Makgetla (TIPS)
Published in Policy Briefs

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

Published in Quarterly Bulletin

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.

Published in Quarterly Bulletin

Main Bulletin: The Real Economy Bulletin - First Quarter 2019  

In this edition

GDP growth: The GDP declined in the first quarter of 2019, while the economy lost jobs. The downturn continues the trend of volatile growth rates that began five years ago. Previous quarterly downturns in this period, however, were driven by agriculture; in contrast, the past quarter saw a broad-based decline. The briefing note on the economic slowdown explores factors behind these trends. Read more.

Employment: Employment in the real economy fell by 160 000 jobs in the year to the first quarter of 2019. It is now at the same level it was in 2015. Manufacturing and construction accounted for the bulk of the net loss in jobs. In the rest of the economy, community and social services lost more than 200 000 jobs while other sectors gained employment. Overall, employment as a whole lost jobs for only the second time since 2010. Read more

International trade: In constant rand terms, South African exports have barely grown since 2013. In US dollars, they climbed from 2016 to mid-2018, but fell more than 10% in the six months to March 2019. Nonetheless, an even faster decline in imports – due in part to slow growth and in part to fairly low petroleum prices – meant that the balance of payments remained positive, although a deficit emerged in the first quarter of 2019. Read more.

Investment and profitability: The 2% fall in investment from the year to the first quarter 2018 to the year to the first quarter 2019 was a central factor behind the economic downturn. The sharpest decline emerged for public investment, although both state-owned enterprises and government departments reported a recovery in the first quarter of 2019 alone. Private investment, in contrast, grew slightly year on year, but contracted sharply from the fourth quarter of 2018 to the first quarter of 2019. 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 14 new projects in the past quarter. Ten of these were in manufacturing, and five were greenfield projects. Six projects previously captured in the Tracker have been updated, with two reaching completion. Read more

Briefing note: The economic slowdown: The first quarter of 2019 saw a convergence of poor economic data. The GDP fell by 0.8%; investment, by 1.1%; and exports by 2%. Employment dropped by 1.4%, or 240 000 jobs. Seasonal job losses are not uncommon in the first quarter, but from 2010 to 2018 they averaged just 0.1%, so 2019 saw a significantly larger fall. Read the briefing note online: The economic slowdown.

Briefing note: African Continental Free Trade Area (AfCFTA) - Supporting inclusive growth and transformation: The African Continental Free Trade Area (AfCFTA) requires 22 countries to ratify its adoption and submit proof/deposit the instruments of ratification with the African Union (AU) for it to come into effect. On 29 April that happened, and on 30 May 2019 the free trade agreement came into effect. Read the briefing note online: African Continental Free Trade Area (AfCFTA): Supporting inclusive growth and transformation.

Published in Quarterly Bulletin

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 yearRead 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 challengeRead 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.

Published in Quarterly Bulletin