“The worse-than-expected gross domestic product (GDP) growth figures for the third quarter of 2021, if taken together with the recent record unemployment numbers, confirm in particular the serious damage that the civil unrest earlier this year and the persistent load shedding have done to the South African economy.”
In commenting on the growth figures released by StatsSA on 7 December, Prof Raymond Parsons, economist from the Business School of the North-West University (NWU), says even agriculture and mining – which have benefitted from the global commodity boom so far – showed a decline in the third quarter of the year.
“We need to see to what extent domestic logistical problems contributed to those negative outcomes.”
He says that, nonetheless, the good news is that, coming from several previous quarters of positive growth, South Africa will probably still show a “rebound” of about 5% or a little less in GDP for this year as a whole.
“But inevitably the growth outlook for 2022 has been weakened by the latest GDP figures. Of special concern here is the flat performance of total fixed-capital formation. A substantial boost in both private and public investment is urgently needed if the South African economy is to achieve sustainable growth over the next couple of years.”
Prof Parsons says what the latest GDP figures again highlight is that decisions about how to deal with the current Omicron Covid-19 wave, the state-of-the-nation address in early February, the fiscal strategy outlined in the main Budget later that month, and the success of the next presidential conference in March will depend on whether a favourable policy environment for job-rich growth is created and maintained.
“2022 must be the year in which economic remedies are implemented to overcome the obstacles to renewed growth.”