South Africa

South Africa GDP Q2 2023

South Africa: GDP growth edges up and beats market expectations in Q2

Economic growth improved timidly in the second quarter, with GDP increasing 0.6% on a seasonally adjusted quarter-on-quarter basis (Q1: +0.4% s.a. qoq). The acceleration overshot market expectations; the upturn doubled the 0.3% increase penciled in by economists polled by Bloomberg. That said, ongoing power outages and logistic constraints continued to hold back economic growth.

Domestically, fixed investment growth hit an over two-year high of 3.9% in the second quarter (Q1: +1.8% s.a. qoq). Additionally, public consumption strengthened to a 1.7% expansion in Q2 (Q1: +1.3% s.a. qoq). These improvements more than offset Q2’s 0.3% contraction in private consumption (Q1: +0.4% s.a. qoq), which accounts for roughly two-thirds of GDP. This contraction marked the worst result since Q3 2021, likely due to elevated interest rates. Still, a slight improvement in the unemployment rate (Q2: 32.6%; Q1: 32.9%) and receding average inflation in the quarter likely prevented a steeper consumption decline.

On the external front, exports of goods and services increased 0.9% on a seasonally adjusted quarterly basis in the second quarter, which was below the first quarter’s 4.3% expansion. Similarly, imports of goods and services growth waned to 3.3% in Q2 (Q1: +4.8% s.a. qoq). Consequently, the external sector detracted from overall growth.

On an annual basis, economic growth improved to 1.6% in Q2, compared to the previous period’s 0.2% growth.

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