South Africa Economic Outlook
The economy was not able to avoid a sequential contraction at the close of 2022. Monthly manufacturing output fell on average in October–December from the previous three-month period, while PMI data showed private-sector conditions improved at a slower pace on average in Q4 than in Q3. Moreover, monthly retail sales declined at the sharpest pace in four months in December, in spite of easing inflation. In other news, on 9 February, President Ramaphosa declared a state of disaster due to the energy crisis; measures aimed at bringing some relief to businesses include providing them with generators and solar panels. Amid mounting public anger due to the energy crisis and persistently high unemployment and poverty rates, local media report that the President will reshuffle the cabinet after the budget is presented on 22 February.
South Africa Inflation
In January, slower increases in prices for transport more than offset a brisker rise in food prices, pushing inflation down to an eight-month low of 6.9% (December: 7.2%). However, it remained above the 3.0–6.0% target band of the South African Reserve Bank (SARB). The Consensus among panelists is that inflation will return to around the midpoint of the target range by end-2023.