SA economy not growing enough to boost employment: analyst

SA’s GDP fell by 0.7% in the second quarter after an increase of 1.7% in the first quarter of 2022, Stats SA said on Tuesday. 

Stats SA said the manufacturing industry fell by 5.9% during the quarter and contributed -0.7 of a percentage point to GDP growth after load-shedding’s onslaught. 

Primary industries in the economy — agriculture and mining — also declined.

Stats SA said the agriculture industry shrank by 7.7% and contributed -0.2 of a percentage point to GDP growth. The mining and quarrying industry fell by 3.5% and contributed -0.2 of a percentage point to GDP growth, while the trade, catering and accommodation industry tailed off by 1.5% and contributed -0.2 of a percentage point to GDP growth.

Reacting to the figures, Anchor Capital investment analyst Casey Delport said in the local economy, material job creation has typically occurred only when GDP growth approaches 3% a year.

“The SA economy is simply not growing at an adequate rate to sustainably boost long-term employment prospects for South Africans,” she said.

Delport said the slowdown in global output, rising interest rates and surging fuel and food prices caused by extreme weather and the war in Ukraine “are likely to weigh on economic growth and job creation going forward”.

However, the GDP for the second quarter of 2022 was slightly better than forecast, she said. SA had a strong start to 2022, but flood damage in KwaZulu-Natal and extensive bouts of load-shedding weighed on activity across different parts of the economy.

Eskom implemented electricity outages for more than half of the days in the second quarter, adding to the record blackouts in the financial year through March that hobbled economic output, she said.

“Looking ahead, growth in 2022 is expected to slow to a meagre 2%,” she added.

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