“The good news is that South Africa has, after all, narrowly avoided a ‘technical recession’ (two successive quarters of negative growth) by registering a scant gross domestic product (GDP) growth rise of 0,1% in the fourth quarter of 2023.”

In commenting on the growth figures for the fourth quarter of 2023 that were released on 5 March, Prof Raymond Parsons, economist from the North-West University (NWU) Business School, says this followed on a -0,2% GDP decline in the third quarter of 2023.

He points out that there were fears in some quarters that the fourth-quarter growth figures might also be negative.

“The bad news is that, on the basis that economic growth is 0,6% for 2023 as a whole, if present trends continue, the economy is likely to see only about 1% growth this year. This is more or less in line with the most recent growth forecasts, but is still simply too low to meet South Africa’s socioeconomic challenges.”

According to Prof Parsons, a red flag that persists is the further 0,2% decrease in gross fixed capital formation in the fourth quarter of 2023. He says this confirms the negative trend in private fixed investment in 2023, as indicated by the recent Nedbank Capital Projects Listing survey.

“Higher fixed investment levels are needed to drive job-rich growth in the period ahead and underscore the importance of investor confidence.”

Prof Parsons says the message remains that these negative trends are reversible, and investor sentiment can be strengthened if energy security can be assured, logistical obstacles resolved, and policy uncertainty reduced. “The more rapidly the promised economic reforms can be implemented, the better the growth prospects will be for the economy.”