Wide gap in South Africa’s GDP growth forecast for 2023

South Africa’s real gross domestic product (GDP) growth forecasts for 2023 range between 1.5% from Absa and 0.3% from the South African Reserve Bank.

Hugo Pienaar, the chief economist at the Bureau for Economic Research (BER), highlighted this gap in a recent Twitter post.

He said the large gap between the GDP growth forecasts could be due to timing, which influenced estimates for the severity of load-shedding.

“Assumptions on the strength of green energy investment and spillovers from soft global growth are also likely to differ in this early part of the year,” Pienaar said.

Last month, the South African Reserve Bank slashed South Africa’s real GDP growth forecasts for 2023 to 0.3%.

Reserve Bank governor Lesetja Kganyago said extensive load-shedding and other logistical constraints resulted in it cutting its GDP growth forecast.

“Given the scale of load-shedding, the Bank estimates that it deducts as much as two percentage points from growth in 2023, compared to the previous estimate of 0.6 percentage points,” he said.

The World Bank also lowered its 2023 GDP growth forecast for the South African economy from 1.5% to 1.4%.

“Growth in South Africa is forecast to weaken further to 1.4% this year before picking up to a still sluggish 1.8% in 2024,” it said.

“Weak activity in major trading partners, tight global financial conditions, and political and policy uncertainty will constrain growth and widen external vulnerabilities.”

Rating agency Fitch expects South Africa’s GDP growth to fall to 1.1% in 2023 as commodity prices wane and the global economy slows.

“Rising inflation and electricity supply issues will also constrain growth,” Fitch said.

A Bloomberg survey found that South Africa’s economy is unlikely to grow by more than 0.3% quarter-on-quarter through 2023.

“Economists see gross domestic product growth slowing to 1.2% this year from 2.3% in 2022,” Bloomberg said.

A recent Thomson Reuters consensus also forecast that South Africa’s economic growth will dip to 1.2% this year.

The International Monetary Fund’s (IMF’s) forecast of 1.2% economic growth is in line with Bloomberg and Thomson Reuters.

The chart below shows the GDP growth forecasts from prominent institutions.