Main Bulletin:  The Real Economy Bulletin - Third Quarter 2021   

In this edition

Trends in GDP growth: The GDP reportedly shrank by 1.5% in the third quarter of 2021. That was the first major setback in the recovery from the COVID-19 depression. Most observers blamed the July unrest. This view is borne out by monthly figures for manufacturing, mining and retail sales, which showed a sharp dip in July followed by a degree of recovery through October. It seems likely, however, that the remarkably rapid surge in COVID-19 from late November will lead to a renewed downturn in December. Read more.

Employment: The Quarterly Labour Force Survey found a fall of 660 000 in total employment, or 4.4%. While the July unrest undoubtedly led to job losses, technical factors mean the survey findings likely overstate their extent. Read more.

International trade: The balance of trade has been strongly positive over the past five quarters, mostly as a result of high mining prices combined, until recently, with depressed petroleum costs. The auto industry, however, saw a steep fall in exports in the quarter. Read more.

Investment: Since the end of 2020, the recovery in investment has stalled well below pre-pandemic levels. Private investment, which accounts for the bulk of capital formation, is still down by more than state-owned company and government investment. That said, public investment has fallen almost continuously, although gradually, since well before the pandemic. Read more.

Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects on a quarterly basis, using published investment information. In the third quarter of 2021, 11 projects were identified as foreign investment projects. The total investment value captured was about R45.4 billion, captured from data available from seven projects.While mining investments accounted for the bulk of investment this quarter, mostly due to a single large project by De Beers, there was also progress on Aspen’s investment in manufacturing COVID-19 vaccines in East London, with committed financing at R11  billion largely from multilateral institutions. There was an equal number of new and complete projects, and greenfield investments accounted for the largest amount of investment types. There were changes in the status of 10 projects previously captured in the Tracker, and these were updated accordingly. Read more.

Briefing Note: COP26 and support for South Africa: The United Nations Climate Change Conference in Glasgow (COP26) took place in early November 2021. The conference aims to mobilise support and negotiate a sustainable climate future among global countries. The conference was attended by 25 000 delegates from about 200 countries, along with around 120 heads of state. Some of the agreements reached at the conference have important implications for South Africa. Read the Briefing Note online: COP26 and support for South Africa.

Briefing Note: Economic implications of the Medium Term Budget Policy Statement: At the start of the pandemic, the government took a conscious decision to maintain spending despite falling revenues in order to avoid further damage to the economy. That decision began to erode in 2021/22, and was fully reversed in the budget plans announced for 2022/3 in the Medium Term Budget Policy Statement. The resulting steep budget cuts are likely to prove a drag on growth. Read the Briefing Note online: Economic implications of the Medium Term Budget Policy Statement.