GDP growth in the first quarter of the year is ‘not necessarily an indication of a serious turnaround in the country’s fortunes’, and real growth will depend on removing major policy obstacles to investment and job-creation, cautions the Centre For Risk Analysis (CRA).
‘With policies such as expropriation without compensation (EWC) still very much on the table, cost-increasing Localisation Master Plans being implemented, and the Employment Equity Amendment Bill on the President’s desk, South Africa is at risk of sinking further into the low-growth trap, the CRA warns.
In a statement following the release of figures showing that the South African economy grew by 1.9% quarter on quarter in 1Q 2022, compared to 1.4% in 4Q 2021, the CRA says the ‘wider context of these numbers, however, is the very low base of the last two years’.
‘The first quarter’s numbers are therefore a rebound, and not necessarily an indication of a serious turnaround in the country’s fortunes.’
Bheki Mahlobo, Senior Analyst at the CRA, noted: ‘The growth in GDP in the first quarter of this year is not a signal of a recovery taking place. It must not be forgotten that South Africa entered a decade-long period of low growth from 2009, whereby GDP growth struggled to surpass 2%. A rebound to 2019 levels just means that South Africa has now gone from a deeper contraction due to the Covid-19 restrictions, to one of economic stagnation.’
Mahlobo added: ‘Further signs of a lack of a recovery are seen in employment figures — the number of people with jobs is still about 1.5 million lower than it was in 2019, which sets South Africa apart from other emerging and developed economies, where employment levels have recovered to pre-pandemic levels.’
Chris Hattingh, Senior Policy Analyst at the CRA, pointed to the cap on growth imposed by the country’s chosen ideological and policy path. He said: ‘South Africa’s recent attempts at structural reform tinker at the margins and do little to resolve barriers to investment and employment, especially regarding labour markets.’
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