Tuesday’s data revealed a slight uplift in South Africa’s economy for the first quarter of the year, narrowly averting a possible recession. Manufacturing and finance sectors persevered, despite the paralyzing effects of continuous power outages.
The first quarter of 2023 witnessed a 0.4% quarter-on-quarter growth in Africa’s most advanced economy, with an annual growth of 0.2%. Both these figures aligned with the predictions made by economists in a Reuters survey.
Stats SA reported growth in eight out of 10 industries in the first quarter, with substantial positive contributions from manufacturing and finance, real estate and business services. Conversely, the sectors of agriculture, forestry, and fishing served as the most significant hindrance to growth.
Risenga Maluleke, Statistician-General, pointed out that the food and drinks manufacturing sector performed notably well, largely due to its lower dependency on electricity compared to other manufacturing sectors. “The rise in household consumption was primarily led by hotels and restaurants. Considering the power cuts, people are more likely to depend on food delivery services like Uber Eats or order from restaurants,” Maluleke told Reuters.
While South Africa managed to steer clear of a technical recession, typically characterized as two consecutive quarters of falling GDP, analysts remain sceptical about its growth prospects. The Central Bank forecasts a modest 0.3% economic growth in 2023, as businesses across the board continue to be impacted by power cuts that can last up to 10 hours a day.
Jason Tuvey, an economist at Capital Economics, warned in a research note, “The prospects appear grim. The severe power cuts, coupled with stringent fiscal and monetary policies and a worsening external situation, imply that the economy is likely to just idle this year.”
In the first quarter, manufacturing and finance, real estate and business services saw growth rates of 1.5% and 0.6% respectively. On the other hand, the sectors of agriculture, forestry, and fishing contracted by 12.3%, and electricity, gas, and water by 1.0%.