South Africa poised to avoid GDP contraction in Q2: Wealth Seminar

South Africa is likely to avert a contraction in Gross Domestic Product for the second quarter of this year. This emerged during the FNB Wealth Series seminar held in Johannesburg this week.

Economists are, however, worried about structural issues that are holding back the local economy.

They’ve also raised concerns that some consumers are shifting away from using credit to buy assets and are now taking on unsecured credit.

Economists say that the country’s political arrangements have not been on a good path and this has led to low GDP growth.

However, they say the mining and manufacturing sectors continue to expand because they’ve become less reliant on Eskom for their electricity demand.

The rolling blackouts is expected to ease next year, which is likely to be less of a constraint to economic growth.

IMF estimates global economic growth for 2023 at 3.0%:

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FNB Senior Economist Siphamandla Mkhwanazi says, “There are factors that are holding back the economy. We are not good at coming out of crisis, however we came out of COVID with high unemployment compared to the pre crisis period.”

Consumers are bearing the brunt of the high interest rate environment. Many consumers are relying on credit to supplement their income.

But Economists expect the Reserve Bank to keep rates unchanged when its Monetary Policy Committee meets this month.

Experts say that there are opportunities for those who want to invest in the stock market due to the weakness of the rand.

FNB Wealth and Investments Chantal Marx says, “There are lots of opportunities for South Africa at the moment, particularly at the JSE.”

Economists expect inflation to remain within the Reserve Bank’s 3% to 6% target, but have warned that there’s still an upside risk to inflation, with food and oil prices increasing at an alarming rate.