Economists project improved South African economy in 2022 first quarter

South Africa’s economy is projected to have shown a robust recovery in the first quarter of 2022, albeit not to pre-pandemic levels.

Economists say the country’s first quarter of 2022 is expected to grow by around zero-point nine percentage points.

However, the impact of the KwaZulu-Natal floods and persistent load reduction in the period may undercut the expected growth.

Their comments come as Statistics South Africa prepares to release the first quarter GDP numbers on Tuesday morning.

Analysts say South Africa may stand to gain from higher export commodity prices, however increased brent crude oil prices and rising food and fuel inflation pose a risk to the growth and inflation outlook.

An economist at Econometrix, Laura Campbell, says: “We also have factors that weigh on economic growth and those factors include the structural impediments to economic growth domestically. We saw intense load shedding in the period and interest rates are all likely to weigh on improvement in GDP in quarter one. Looking further ahead, unfortunately South Africa was hit by another external force, the KZN flooding, and that will weigh on quarter two GDP and 2022 growth as a whole.”

ABSA Economist, Miyelani Maluleke, says GDP is expected to rise by zero point nine percent in the first quarter of the year before slowing down in the second quarter.

He says South Africa remains vulnerable to external factors such as the impact of the war in Ukraine and supply chain disruptions in China.

“South Africa’s overall recovery from the depths of the hard lockdowns has been faster than we had anticipated. Certainly, when we look at the high frequency numbers that we have seen for the first three months of the year, it does look like that moment has carried on into the first quarter of this year. We’ve  seen things like the retail sales volumes, wholesale volumes were up in the first quarter of this year and even on the production side of the economy, we’ve seen the manufacturing sector so quite well.”

The International Monetary Fund is projecting real GDP growth at 1.9% for South Africa in 2022.

Economy bounced back in last quarter of 2021

Meanwhile, the local economy bounced back in the fourth quarter of 2021, following a difficult third quarter.

Statistics South Africa said the Gross Domestic Product increased by 1.2% in the quarter following a 1.7% contraction in the third quarter. Economic growth for 2021 is 4.9%, in line with expectations.

More details in the report below: 

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