Durban - Economists have had mixed reactions to South Africa’s 0.4% GDP growth in the first quarter of 2023.
The GDP growth was announced on Tuesday by Statistics SA.
The pedestrian 0.4% growth meant that South Africa narrowly avoided a technical recession after the economy contracted by 1.1% in the fourth quarter of 2022.
Professor Irrshad Kaseeram of the University of Zululand’s economics department said that although this was good news for South Africa, a developing country such as Brazil, which faces similar challenges as South Africa, experienced better first quarter GDP growth.
“Brazil’s economy grew by 1.9%. This indicates the serious structural constraints we have in employment where unskilled and semi-skilled workers can’t find jobs due to a high wage economy that favours highly skilled workers, lack of private sector investment due to electricity provision (woes), skills constraints and governance uncertainties.”
Professor Bonke Dumisa said that it was welcome news that the economy had grown by 0.4%.
“It was a concern that the South African economy experienced negative growth in the last quarter of 2022, and if we had seen another quarter of negative GDP growth this would have been a huge psychological knock.
“We also would have found that the rand would have been much weaker today against international currencies. Also, when there is negative growth it does affect the mindset of businesses and consumers, putting more strain on the consumer.
“However, we must note that businesses and the ordinary South African would not benefit from this (0.4% growth) as it is not enough growth to make an impact.”
University of KwaZulu-Natal economics lecturer Dr Sanele Gumede said that any GDP growth was a good thing.
“It’s obvious that this is slow, but we must remember when you are starting from contraction in the economy like the last quarter of 2022, it’s difficult to register a high GDP growth in the next quarter.
“It is also unusual that we recorded negative growth in the festive season and now have recorded positive growth in the first quarter of the new year.”
Senior agricultural economist, FNB Agribusiness, Paul Makube, said: “While eight of the industries recorded growth, agriculture was a major drag on growth as it deteriorated further by double digit levels.
“After contracting by 2.4% year-on-year (y/y) in the fourth quarter of 2022, agriculture GDP fell sharply by 12.3% y/y, which reflects a downturn in economic activities in the field crops and animal product industries.”
Makube said that the sector continued to grapple with challenges such as logistics and infrastructure deterioration, high energy costs, rising interest rates, elevated input costs, as well as disease outbreaks.
“Nonetheless, we expect a rebound in the remaining quarters of 2023 given the huge harvest outlook for summer and winter grain and oilseed crops.
“Citrus will see another good harvest, with record volumes earmarked for exports, hopefully aided by the declining shipping costs and the weaker rand exchange rate.”
Sizwe Pamla, Cosatu national spokesperson, said the trade union federation had noted the GDP figures.
“Given the dire conditions millions of workers and the economy have been facing, avoiding a return to a recession is welcome news.
“This is more so with the rampant levels of load shedding, cable theft and a myriad other crises restricting and suffocating the economy.”
However, he said the minor growth could not be celebrated.
“This is not enough to make a dent in the seemingly intractable and deep socio-economic problems facing the country, especially the dangerously high unemployment rate of 42.4%.
“The government and the leadership of the business sector need to redouble all possible efforts to ensure that the economy does not meekly float aimlessly, but ensure that it begins to grow to meet the long sought-after 4% GDP growth rate needed if we are to slash unemployment, poverty, and inequality.”