South Africa

Zero South African economic growth expected in 2023

Many experts project close to zero economic growth for 2023 as severe load-shedding has hobbled the country’s growth prospects.

In 2022, the economy grew by 2.5% – above the 1.9% proposed by the minister of finance in the medium-term expenditure framework. Economic growth in 2023 promises to be much lower. 

The IMF recently revised their 2023 South African growth projections down 1.1% to 0.1% in 2023. 

In March, the South African Reserve Bank (SARB) dropped its forecast down to 0.2% growth for 2023. It said the supply-side performance of the economy remains “severely impaired” due to load-shedding and logistical constraints.

In the February budget, Treasury projected economic growth of 0.9% for 2023.

Daily Investor asked experts for their opinion on what is in store for economic growth in 2023.


Hugo Pienaar – Chief economist, Bureau for Economic Research

Bureau for Economic Research (BER) chief economist Hugo Pienaar said that the BER had revised its real GDP growth outlook down to 0.3% for 2023. 

The downgrade was based on the assumption that the more severe load-shedding experienced so far this year will continue for at least the first half of 2023.

Another domestic growth constraint is an expected weak real export performance, as logistical bottlenecks hamper shipments to the rest of the world.

While slower employment growth and the lagged impact of aggressive interest rate hikes are set to weigh on consumer spending growth – one bit of relief is that the projected easing of inflation will support household incomes.

  • Projection: 0.3%

Jeffrey Schultz – Senior economist, BNP Paribas South Africa

BNP Paribas South Africa forecasted GDP growth of 0.2% for 2023.

Jeffrey Schultz, a senior economist at BNP Paribas South Africa, said the lower-than-expected GDP growth decline –1.3% quarter-on-quarter – indicates the pain that is to come in 2023.

A non-negligible underperformance in the finance and business services industry, the largest weighted contributor to GDP, caused most of the supply-side downside.

The mining, manufacturing, agriculture, electricity and general government services sectors contributed to the remainder of the supply-side decline.

On the expenditure side, net trade was the largest contributor to GDP decline. 

The light at the end of the tunnel on the expenditure side is that fixed capital formation rose by 1.3%, which could indicate a positive impetus in private electricity generation.

However, Schultz said that, overall, the numbers support BNP Paribas’ 0.2% GDP estimate – and, if anything, indicates downside risk to that figure.

  • Projection: 0.2%

Maarten Ackerman – Chief economist, Citadel

Maarten Ackerman, the chief economist at Citadel, said they see 0.0% growth in 2023, mainly due to load-shedding severity.

The other reason for the no-growth projection is that consumers are under severe pressure. High unemployment, rising interest rates, the cost of living, and take-home pay being under pressure all make for a tough environment in 2023.

Ackerman flagged exports, agriculture, mining, manufacturing and construction as key sectors for growth in 2023.

Citadel looked at economic growth over three years, and the good news is that Ackerman believes there is reason to be optimistic beyond 2023.

From a low base into 2024 and 2025, Ackerman said growth could be around 1.5% by 2025. If significant alternative energy comes online, growth of 1.8% can be expected.

The key is to fix the electricity issues to enable better growth in 2024 and 2025 argued Ackerman.

  • Projection: 0.0%

Siphamandla Mkhwanazi – Senior economist, FNB

FNB senior economist Siphamandla Mkhwanazi said conditions are becoming increasingly unfavourable for the domestic economy. FNB expects economic growth to slow to 0.4% in 2023.

This would be the second weakest growth level since 1993.

FNB’s growth forecasts for 2024 are better but remain low owing to continued structural constraints and subdued domestic demand. Growth is forecast at 1.4% in 2024 and 1.6% in 2025.

“We expect the sharper-than-expected slowdown in global economic activity to weigh on domestic activity, amplifying the impact of the pre-existing domestic constraints,” he said.

“These include acute electricity shortages and logistical bottlenecks that severely hamper domestic economic activity.”

The high cost of living and the weak labour market will weigh on household consumption, said Mkhwanazi.

While the ongoing energy-related investment might boost activity in certain sectors, such as construction, this will likely not be enough to counteract the wave of downside risks outlined above.

  • Projection: 0.4%

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