In this edition

GDP growth: The GDP grew 0.6% in the second quarter of 2023, a slight improvement over the previous quarter and maintaining the return to pre-pandemic levels after the extraordinary drop in the second quarter of 2020. Growth was driven by a 5% increase in investment by private business and state-owned companies, likely reflecting the rapid expansion in off-grid, largely renewable generation. Read more.

Employment: Employment climbed rapidly from the second quarter of 2022 to the second quarter 2023, adding 780 000 positions. Almost all of the net job gains were in the formal sector, with the strongest showing for retail, sales and elementary positions. Manufacturing kept pace with overall jobs growth, but the picture was mixed at industry level. Metals, clothing and auto saw gains while net job losses emerged in chemicals and machinery and food processing remained flat. Read more.

International trade: A trade surplus of R10 billion was recorded In the second quarter of 2023, up from a deficit of R5.1 billion in the first quarter. Mining exports fell by 20% in the year to the second quarter of 2023, driven by a drop in coal prices at the end of 2022. In contrast, agriculture and manufacturing exports continued to climb, increasing by 11% and 7% respectively. Read more.

Investment and profitability: Investment rose to 15.5% of GDP from a low of 14% in mid-2021. Although this equalled the pre-pandemic investment rate, it remained below the level of 20% to 25% most economists consider necessary for rapid industrialisation. Profitability continues to fluctuate sharply. In construction, returns on capital shot up compared to the previous three years. In contrast, mining and manufacturing dropped off their peaks in the second quarter of 2021 and 2022. Read more.

Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published investment information. It captured a total of 30 projects in the second quarter of 2023, with an investment value of R259.71 billion recorded from 27 projects. Most of the projects added to the Tracker in the second quarter of 2023 were announced at the South African Investment Conference held in April of 2023. Only seven projects were not announced at the conference. At least half of the projects recorded are in the manufacturing industry, with others in mining services and utilities. Read more.

Briefing Note: Internal migration and industrial policy - by Neva Makgetla. The deadly fire in Marshalltown underscored the abject failure to accommodate the massive influx of new migrants into South Africa’s main urban hubs in ways that can promote both economic and social development. Everywhere, industrialisation builds up economic hubs while leaving much of the country behind. In South Africa, however, discriminatory citizenship policies under apartheid prevented the normal flow of people to the main urban areas. That has fuelled a much larger and enduring migratory wave since 1994. In response, industrial policy has tended to try to build up new industrial centres in remote rural areas, rather than focusing on integrating newcomers into more efficient and dynamic urban agglomerations. Read the Briefing Note online: Internal migration and industrial policy.

Briefing Note: TIPS report on localisation - by Neva Makgetla. The localisation strategy has become a leading strand in the industrial policy approach adopted by the Department of Trade, Industry and Competition. TIPS has recently published a report that explores the conceptual underpinnings of the strategy as well as its practical implementation. The report aims both to assist practitioners in determining when localisation makes sense, and to indicate changes in procurement systems to promote better outcomesThe Read the Briefing Note online: TIPS report on localisation. 

Briefing Note: The APORDE programme on development economics - by Saul Levin. The annual African Programme on Rethinking Development Economics (APORDE) opened in the first week of September 2023. APORDE is a high-level training programme in development economics funded by the Department of Trade, Industry and Competition to build capacity in Africa. It focuses on improving how we as Africans think about and implement industrial development. The programme is supported by the South African Research Chair in Industrial Development (SARChI) based at the University of Johannesburg, and administered and co-facilitated by TIPS. The Read the Briefing Note online: The APORDE programmme on development economics.