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Economists downbeat ahead of release of GDP figures

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Economic growth is expected to have slowed in the fourth quarter of 2022, on the back of intense load shedding, a rise in the cost of living, high interest rates and elevated levels of inflation.

Economists say they expect for economic growth to have stalled in the fourth quarter, while growth for the full year of 2022 is expected at between 2% and 2.5%.

Their comments come ahead of the release of Gross Domestic Product figures by Statistics South Africa on Tuesday morning.

Government has upwardly revised its growth expectation for 2022 from a projected 1.9% in October to 2.5%.

Chief Economist at Econometric, Azar Jamine says the mining and manufacturing sector are expected to have weighed on economic growth in the fourth quarter.

“Essentially, we have received fairly weak data with regard to mining and manufacturing production, and the retail sales have also not been great. So, there is a chance that the GDP for fourth quarter 2022 will come in negative which is a contrast to the unexpectedly strong 6% growth of the third quarter of 2022. So, I think most people are expecting a relatively weak outcome.”

Chief Economist at Investec, Annabel Bishop, says economic growth is expected to have stalled due to load shedding and a slowdown in global growth.

She says economic growth in 2023 is expected to be flat due to the ongoing energy crisis.

“(In) 2023, we think growth will come out at 0.5%. We have a year ahead of severe load shedding which will damage economic activity in South Africa and of course, as well, economic growth forecasts have been revised down since the start of the year. Early January expected economic growth to be 1.1%, now we’re expecting it to be 0.6% and unfortunately, much will depend on the stages of load shedding that South Africa sees averaging for this year in terms of what happens for the economic outcome.”

Energy Analyst, Tshepo Kgadima, says electricity, or the lack thereof, will have a significant impact of economic activity and growth in the country.

“We are going through rolling blackouts, and economically, the economy has actually shrunk and it is not in a position above 2%, and electricity, by the way, is the most accurate measure of GDP performance and growth or GDP shrinkage.”

The economy contracted by 0.7% in the second quarter before growing by 1.6% in the third quarter of last year.

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