The government and ANC’s celebration of South Africa’s sluggish economic growth in the first quarter was slated as misguided and ill-informed.
On Tuesday, StatsSA revealed that South Africa’s gross domestic product (GDP) increased by 0.4% in the first quarter of 2023. It means the country avoided a technical recession.
Despite avoiding a recession, economists have warned that the uptick will likely be short-lived, with economic pressure lying ahead.
Economists at Nedbank said increased load-shedding is weighing on confidence, disrupting operations, and driving up production costs.
“We forecast GDP growth of only 0.1% in 2023, with the risks to our forecasts remaining on the downside,” it said.
Citadel chief economist Maarten Ackerman said South Africa must “face the facts” and realise that it is in a per capita recession.
“Population growth is outstripping economic growth, and, to my mind, that means we are already in a per capita recession,” said Ackerman.
While the Q1 2023 data meant the country avoided a recession, Ackerman said a local and global recession remains imminent.
Bureau for Economic Research chief economist Hugo Pienaar is also negative about the local economy, saying 2023 is a “write-off” in terms of GDP growth.
Reza Hendrickse, Portfolio Manager at PPS Investments, said the group isn’t positioning its portfolios to be more optimistic about South Africa’s economy any time soon.
“Our portfolio positioning currently reflects this dim economic outlook by being conservatively positioned in South African growth assets,” he said.
The government and ANC politicians dismissed the concerns of economists and fund managers and celebrated the latest data.
Minister in the Presidency, Khumbudzo Ntshavheni, said South Africans should draw inspiration from the 0.4% increase in GDP in Q1 2023.
She said the latest data shows that the country is able to make a dent in the economic difficulties it faces.
The minister said the positive GDP indicators serve as encouragement that the country is making progress in line with the Economic Reconstruction and Recovery Plan.
“The gains across a number of sectors tell us that we are rebuilding our economy and that we must keep working together as a nation to build on the growth we are experiencing,” she said.
ANC Secretary-General Fikile Mbalula called the latest economic growth figures a “pleasant surprise”.
He said South Africa’s GDP “surpasses to the upside with 0.4% growth recorded in the first quarter of 2023”.
“Eight out of the ten sectors reported positive increases and contribution to Gross Domestic Product (GDP) in the past three months.”
Ntshavheni and Mbalula’s comments about GDP growth were slated by economists and other stakeholders as misguided and uninformed.
Economist Thabi Leoka told Mbalula that there is nothing pleasant to celebrate about South Africa’s GDP growth figures.
She highlighted that the country’s economy is projected to grow by just 0.1% in 2023, which is poor in comparison to similar economies.
“The 0.4% growth shows that there was barely any growth in the first quarter of 2023. The South African economy is stagnant,” she said.
Professor Alan Hirsch from the Nelson Mandela School of Public Governance at UCT was equally critical.
He highlighted that South Africa’s economy is still growing slower than the population growth rate, which means that per capita income continues to plummet.
Simply put, South Africans are getting poorer, which is not something for the government to celebrate.
Well-known columnist Tom Eaton said, “anybody who genuinely draws inspiration from 0.4%, or who tells us that we should be inspired by it, is so fundamentally out of touch with excellence that they should automatically be ineligible for any kind of leadership position”.