PwC economists predict that SA’s economy will grow by 1.5% in 2023

PricewaterhouseCoopers (PwC) has taken an optimistic view of the country’s growth compared to other major local and international institutions.

Economists at PWC have projected that the South African economy will grow by 1.5% in 2023.

However, the professional services firm has cited the persistent electricity shortage and underperformance of the rail and port network as having a drag on growth.

Their comments come as Finance Minister Enoch Godongwana is expected to table the mid-term budget in Cape Town next week.

PwC’s economic growth projection closely resembles the National Treasury’s mid-term budget growth forecasts of 1.4%.

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However, the firm revealed that its PwC Global CEO Survey revealed that 59% of the South African CEOs that participated in the poll expect economic growth to decline this year.

PWC says the various measures taken by big businesses to mitigate the impact of load shedding have been effective.

PwC’s Chief economist Lulu Krugel says, “What we are seeing when we discussed that number is that there are some positives that are coming through, in terms of big business reacting to load shedding. And that has a bit of a boost effect on GDP. If you look at spending, for years, for years now, capital spending by big businesses has basically been stagnating. So, that’s an area where they are starting to spend and it’s actually resulting in some activity.”

Krugel says the risks to the government’s expenditure include Eskom, Transnet, and the public sector wage bill. She says the budget deficit is expected to increase to 5.5% this year due to slow economic growth and increased spending pressures: “And then of course the basic income grant and national health insurance, we don’t expect to see the change in direction in terms of spending there. Those areas will probably remain underfunded just as a result of the pressure that we’re experiencing in other areas, one of them being load shedding and Eskom.”

PwC expects the country’s net debt-to-GDP to peak at 70.1% this year before stabilising at 80%.

An Economist at PwC, Xanthi Payi says the government should be able to maintain this position even after taking on some of Eskom’s debt as anticipated.

“I mean already Eskom has had some government guarantee so that is already factored in the system depending on where you put it. But if they continue as restricted in terms of spending then there really no reason why they shouldn’t get there, it’s just a couple of bumps this year and next year, but it’s feasible that they can hold it till next year.”