Main Bulletin: The Real Economy Bulletin - Second Quarter 2019  

In this edition

GDP growth: Statistics South Africa reported rapid growth in the GDP in the second quarter, at 0.8% in actual terms – that is, 3% at an annualised rate. The data continue the increased volatility in the GDP data over the past five years. The data also again raise questions about the seasonal adjustment of the quarterly GDP data. Read more. 

Employment: After a sharp fall in the first quarter, employment in the real economy was essentially stable in the year to the second quarter of 2019. It is now at the same level it was in 2015. Read more. 

International trade: Both imports and exports increased between the first and second quarters. Only marginal growth was observed compared to the same period last year. Read more.

Investment and profitability: Investment fell almost 2% in year-on-year terms through the second quarter of 2019, although it showed a sharp recovery in the past quarter. The decline was due entirely to a fall in public sector investment over the year, with gains in the second quarter of 2019 reflecting a steep improvement in private business investment. Read more.  

Foreign direct investment projects: The TIPS FDI Tracker tracks foreign direct investment projects, analysing new and updated projects quarterly. Based on media monitoring, it added 17 projects this quarter – the bulk of which came to completion – while one project was updated. Read more. 

Briefing note: Seasonality in the GDP data: According to official Statistics South Africa GDP data, even after adjusting the data to remove seasonal variations, the economy contracted in the first quarter of 2019 in five of the six years from 2014 to 2019. In contrast, the economy reportedly shrank just twice in the second quarter, once in the third quarter, and not at all in the fourth. These data point to an extraordinary shift in the GDP data, with the emergence of an annual cycle in the seasonally adjusted quarterly figures.Read the briefing note online: Seasonality in the GDP data. 

Briefing note: Industry Master Plan methodology: The relaunch of industrial policy from early 2019 included proposals for Master Plans for priority industries.This briefing note draws on experience with the development of Master Plans for various sectors as well as the experience of sector strategies in the auto industry to propose a standard methodology for the process. Read the briefing note online: Industry Master Plan methodology. For a more detailed discussion of this topic see TIPS Policy Brief Master Plans for industrial policy.

Briefing note: Brexit and South African trade: The current disarray in British politics centres on the nature of Brexit, with no consensus in sight either on how it should be achieved, or on the UK’s future relationship with the EU. The new Prime Minister has faced strong resistance to a no-deal exit, but it is not clear what proposals could achieve a majority in Parliament, much less support from most British citizens. Because the UK is still one of South Africa’s major trading partners, the final outcome will have significant implications for our own economyRead the briefing note online: Brexit and South African trade.

Briefing note: FDI that supports development priorities – Measuring the “quality” of foreign direct investment: The intensified drive to increase investment raises the question of “quality” of FDI into South Africa. That in turn points to the importance of developing tools or mechanisms to assess FDI, with the aim of maximising its benefits towards achieving inclusive industrialisation. It is important to understand the extent to which projects contribute to South Africa’s development priorities – at a granular level, essentially being able to measure their value-add against developmental priorities. Read the briefing note online: FDI that supports development priorities.