Efficient Group founder and chief economist Dawie Roodt said South Africa faces serious headwinds in 2023 and that people should prepare for a tough year.
Speaking to the Centre for Risk Analysis, Roodt said South Africa followed global trends in 2022, with high inflation and rising interest rates.
The South African Reserve Bank started to increase interest rates early in the cycle, which served the country well.
Roodt said although it is painful for consumers, there will be further interest rate hikes at the beginning of 2023.
The good news is that we are getting close to the end of the cycle, with inflation likely to slow down by the middle of the year.
The biggest danger to the average consumer, Roodt said, is the South African government which is preparing for an election in 2024.
“With the 2024 election looming, we don’t expect much governing taking place, but there will be a lot of politics happening,” he said.
“The ANC realises it is in trouble. They realise that they don’t have enough time to put measures in place to get political support.”
Another challenge is the lack of electricity, which placed a lid on economic growth. “We expect between 1% and 2% economic growth, in line with population growth.”
The result is that the high levels of unemployment and poverty will remain elevated and even rise slightly.
“In terms of economic growth, South Africa is not going to do well. We are probably not going to do well for many years,” he said.
There is some good news for consumers. The oil price is likely to decline, resulting in lower fuel prices.
Inflation easing, interest rate hikes coming to an end, and potential fuel price cuts can soften the blow to South Africans.