South Africa: Economy dodges recession in Q4
The South African economy avoided a technical recession by a whisker in the fourth quarter of 2023, when GDP rebounded 0.1% on a seasonally adjusted quarter-on-quarter basis (Q3: -0.2% s.a. qoq). Still, Q4’s upturn missed market expectations.
On an annual basis, GDP bounced back, increasing 1.2% in Q4, contrasting the previous period’s 0.7% contraction. Accordingly, the economy rose 0.6% overall in 2023, which was in line with the National Treasury’s expectations. However, 2023’s result was notably below last year’s 1.9% growth.
The quarterly rebound chiefly reflected household spending returning to growth, rising 0.2% seasonally adjusted quarter on quarter in the fourth quarter (Q3: -0.2% s.a. qoq), which marked the best reading since Q1. Moreover, fixed investment slid at a milder pace of 0.2% in Q4 from the 3.8% contraction recorded in the previous quarter. That said, government consumption dropped at the sharpest pace since Q3 2023, contracting 0.3% (Q3: +0.5% s.a. qoq).
On the external front, exports of goods and services were unchanged at Q3’s 0.6% increase. Conversely, imports of goods and services rebounded, growing 4.0% in Q4 (Q3: -8.7% s.a. qoq).
Our Consensus is for sequential GDP growth to pick up steam in Q1 2024, partly on a low base of comparison. Overall in 2024, our panelists expect the most industrialized economy in Sub-Saharan Africa to roughly double its 2023 GDP expansion. That said, the heavyweight will still post the slowest growth rate in the region. Key elements that will continue to hold the economy back include the port, rail and crippling power supply crises.
Reflecting on 2023’s overall result, analysts at the EIU explained:
“Growth would been closer to 1% in 2023 if not for a sharp contraction in agriculture, which shrank by 12.2%, aggravated by the damaging impact of bird flu on the poultry sector. More generally, serious power shortages and freight transport bottlenecks affected most sectors, especially industry.”