South African’s National Liberation Movement
SA's Economy Grew by 0,6% in Q2: 2023
The ANC notes and welcomes the modest but better than expected growth of +0.6% in the second quarter of 2023, which followed a growth of +0.4% in Q1 2023. We welcome the rise in fixed investment spending (‘Gross Fixed Capital Formation (GFCF)’) in the quarter by +3.9%, largely driven by rises in investments in machinery and other equipment, signaling that firms are beginning to invest in tooling and growing installed capacity, as this growth rate, which is the highest in three years, shows.
President Cyril Ramaphosa has been spearheading the drive for investment into the country and the quarterly output publication from StatsSA shows that some of that investment is being felt in the real economy rather than only in portfolio investment. That this investment spending has occurred in a challenging context, faced as we are by loadshedding, shows that there are favourable responses to some of the ‘policy signals’ emerging from the ANC government. These include but are not limited to, incentives in the energy space such as the
125% depreciation allowances for capital investment on solar by firms and the personal tax allowances to stimulate solar energy utilisation.
Moreover, the ANC notes that six industries recorded positive growth between the first quarter of 2023 and the second quarter of 2023. The manufacturing industry increased by +2.2% and contributed +0.3 of a percentage point to GDP growth, it is pleasing that nine of the ten manufacturing divisions reported positive growth rates in the second quarter. The finance industry increased by +0.7% and contributed +0.2 of a percentage point to GDP growth. The agricultural industry increased by +4.2% and contributed +0.1 of a percentage point to GDP growth, the ANC welcomes this significant growth and notes that this was primarily due to increased economic activities reported for field crops and horticulture products which are the most labour intensive segments of agriculture.
The ANC is also pleased that the exports of goods and services increased by +0.9%, however due to the recovery increasing consumption expenditure, this also gave rise to imports growing at a faster rate, thus negatively affected the net exports element of GDP growth. Similarly, we also note the growth in unsold production, which resulted in a R58.9 billion increase of inventories in the second quarter of 2023, driven mostly by manufacturing, trade and tourism.
Households spending and consumption decisions remain challenged in a difficult environment, and this was seen in the negative quarterly growth in the wholesale, retail and trade sector. With the inflationary outlook improving, the prospect of the interest rate hiking cycle coming to an end soon and the approaching festive season, the ANC anticipates a strong recovery from the wholesale and retail trade sector which accounts for over a fifth of all employment in the South African economy.
The ANC remains positive for Q3, especially with the significant reduction in loadshedding throughout most of the quarter.
The reforms being undertaken by the ANC government remain crucial in unlocking a period of sustained economic growth that can yield the economic and market activities that will ensure we make meaningful progress in addressing poverty, inequality, and unemployment. A critical feature of these reforms requires prioritization of an aggressive social and economic infrastructure programme, as the ERRP suggests.
Furthermore, it requires meaningful reform in unlocking constraints to investment, economic and social activity through reforms of local government through the District Development Model and rebuilding our network industries (and the state owned entities who function as lead firms in these industries), encouraging localization and export growth, moderating the impact of administered prices on firm and household-level activity, all while protecting the consumption baskets of the most vulnerable through meaningful access through social transfers and indigent programmes.
In this way, we will ensure our growth is inclusive, and that no one is left behind in the economic recovery that the ANC is pursuing, which is aimed at ensuring a better life for all.
ISSUED BY THE AFRICAN NATIONAL CONGRESS
ANC NATIONAL SPOKESPERSON
076 891 5420
ACTING NATIONAL COMMUNICATIONS MANAGER
066 056 0911