South Africa’s embattled economy could grow if underlying issues are addressed, an economist has said.
In light of the recently released second quarter (Q2) economic growth figures, Citadel’s chief economist, Maarten Ackerman said the areas of the economy that saw the most growth in the past quarter could only achieve these figures with a rapid transition to alternative energy, given that load shedding continued unabated.
“The country’s economy was R1.161 billion strong in the third quarter of last year versus R1.160 billion now,” Ackerman said.
“Also considering that we have seen almost no growth since South Africa’s pre-Covid levels, it means the country has seen very flat GDP growth over the past few years, mainly due to the structural challenges it is facing,” he said.
He believes that South Africans must realise that we cannot expand the economy until we first improve its infrastructure.
Statistics South Africa (StatsSA) announced the latest GDP growth data for South Africa on September 5.
Ackerman notes that South Africa's 0.6 percent growth rate for the past quarter, as measured quarter-on-quarter since Q1, and its 1.6 percent growth rate at the same time last year, or 0.9 percent growth since the beginning of the year, is “in fact still very close to where the country was in mid-2022.”
South Africa is hampered by structural challenges, he said.
“Load shedding is still ongoing, and as a result, the construction industry is still under water, which is a great pity, because construction is an important job creation sector in the economy,” Ackerman said.
The sectors that performed the best in the second quarter of 2023 – manufacturing, agriculture and mining – did so because they made use of alternative energy, said Ackerman.
“While it looks positive that gross fixed capital formation (GFCF) was up by a very strong 3.9 percent – driven by machinery and construction works – this can partly be ascribed to the energy crisis which forced companies to invest in alternative energy sources such as solar panels and lithium batteries.
“However, we have to acknowledge that this is the seventh positive quarter in a row for GFCF. We have not seen a growth streak like this for GFCF in many decades and this speaks to both private and public companies reinvesting back into the economy rebuilding capacity,” Ackerman said.
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