The South African Reserve Bank (SARB) has increased South Africa’s GDP growth outlook for 2023 to 0.3% from its previous forecast of 0.2% in March.
This was revealed in the Monetary Policy Committee Statement delivered by Reserve Bank governor Lesetja Kganyago on Thursday.
The SARB’s global growth outlook is much more positive, with the Bank expecting global growth of 2.4% in 2023 and 2.7% in 2024.
Kganyago cautioned that global markets remain highly volatile; thus, the forecasts will likely change.
The global growth outlook is clouded by persistently high inflation and pockets of financial instability.
However, broadly economic conditions are looking more positive globally, according to the governor.
“South Africa’s economic conditions, however, remain poor”, with elevated stages of load-shedding and logistical inefficiencies hampering the country’s economic performance.
Load-shedding alone is estimated to have reduced South Africa’s potential GDP growth in 2023 by 2%.
The Reserve Bank expects the South African economy to become more resilient to the effects of load-shedding as businesses procure alternative power sources.
“An improvement in logistics and sustained reduction in load-shedding, or energy supply from alternative sources, would significantly raise growth”.
Global institutions see no growth in South Africa
The Reserve Bank’s slightly more positive outlook for South African GDP growth bucks the trend of notable institutions taking a more negative outlook of the local economy.
Most institutions see South Africa growing at less than 1% this year, with a very fine line between stagnation and a recession.
Fitch has taken a substantially more bearish view of South Africa’s growth prospects, reducing its GDP growth forecast to just 0.2% for 2023.
This is down from its previous forecast of 1.1% at the beginning of 2023. Fitch expects growth of 1.2% in 2024, weaker than its initial projection of 1.7%.
The agency expects load-shedding to have a noticeable effect on longer-term potential growth if not resolved swiftly.
The IMF announced that it expects South Africa’s real GDP growth to decelerate to 0.1% in 2023, mainly due to the effects of load-shedding.