The economy is expected to have avoided a technical recession in the first quarter of 2023. Economists say some improvements in industrial production numbers in the first quarter of the year are expected to have boosted economic growth slightly in the period.
Their comments come as Statistics South Africa is expected to release the GDP numbers for the first quarter of 2023 on Tuesday morning.
The economy contracted by 1.3% in the fourth quarter of 2022 on the back of intense load shedding and other economic pressures.
Economists warn that while a slight rebound in growth in the first quarter is expected, the economy remains fragile due to frequent power cuts and cost pressures.
An Economist at Absa, Miyelani Maluleke, forecasts growth of 0.2% on the back of improved mining and manufacturing output in the first quarter.
“We believe that South Africa did avoid falling into a technical recession, we have already seen various high frequency data such a mining and manufacturing for instance. There was fair amount of resilience across some different parts of the economy so we are forecasting GDP growth of just 0.2%, consensus a little bit stronger than that at 04% but broadly we do believe that as Absa research that South Africa did manage to avoid falling into a recession in the first quarter of this year.”
A Chief Economist at Investec, Annabel Bishop says growth of just over zero percent can be expected.
“South Africa sees the release of GDP this week, and it will be bolstered by a lift in industrial production. Industrial production’s mining, manufacturing, electricity production rose by about 1% in the first quarter of this year. However, this 1% increase came off a low base of the fourth quarter of last year. The first quarter of 2022 saw a contraction in GDP and in industrial production which has caused a rise as a year-on-year base effect. If you take out this base effect, you would actually find out that there’s a contraction industrial production. Logistics aside, it looks like South Africa may avoid a recession coming out close to zero.”
The South African Reserve Bank forecasts economic growth of 0.3% for this year.