It is hard to recall a time when there were as many economic and political cross-currents as there are for South Africa as it enters 2023. This is according to Prof Raymond Parsons, economist at the Business School of the North-West University (NWU).

According to him, South Africa’s economic prospects in 2023 will be broadly shaped by global developments, Eskom, and policy implementation commitments by the government. The interaction between these factors will determine the risks and the opportunities that exist over the next twelve months in a changing socioeconomic environment in South Africa and elsewhere.

The reality is nonetheless that, in the meantime, business and consumers in South Africa will face another tough year, with strong inflation, rising interest rates, high unemployment, load-shedding and low growth, all of which make for a challenging economic period ahead. However, the much-better-than-expected GDP growth figures for the third quarter of 2022 nevertheless gave South Africa a stronger cushion of forecasts with which to absorb some of the negative trends on which 2022 ended. And it is likely that the rate of inflation, although still unacceptably high, will ease in 2023, particularly if fuel costs decline further.

Looking ahead, however, the expected tepid performance of the three main drivers of South Africa’s economic activity in 2023 – exports, consumer spending and investment – suggests that economic growth is likely to be only about 1,4%. This is below population growth. There is no more critical issue for future South African prosperity than that real inclusive economic growth should be accelerated. Growth has been too low for too long, as countless surveys and official policy statements have emphasised.

“So, although the economy is at present struggling to maintain momentum in a combined cycle of elevated global and domestic economic uncertainty, there are remedies that can strengthen South Africa’s economic resilience and unlock more growth support in 2023. If President Cyril Ramaphosa can convert his stronger political mandate into rapid implementation of pro-growth policies and projects soon, South Africa’s prospects for job-rich growth will improve in 2023. And Eskom in particular must be fixed urgently. No economy can grow and create jobs if chronic energy insecurity and widespread disruption persists,” Prof Parsons said.

The ball therefore lies mainly in South Africa’s court in 2023 to mobilise the policies and projects demonstrating real progress in key economic reforms that can make a positive difference to its economic performance. Boosting investor confidence remains essential. The policy test in 2023 will be the extent to which South Africa can smartly minimise the global headwinds and maximise the domestic tailwinds, especially through deeper and wider collaboration with the private sector. This will help to reduce prevailing policy uncertainty and ignite confidence.