In this edition

GDP growth: The GDP shrank slightly, by 0.1%, in the first quarter of 2024. The decline underscored the increased volatility of GDP growth since the COVID-19 pandemic started in 2020. The GDP declined in five quarters over the past three years, compared to nine from 1994 to 2018. The volatility resulted, in part, from extraordinary fluctuations in world mining prices as well as shortfalls in infrastructure. The inability of Transnet and Eskom to meet post-pandemic demand has vastly accelerated growth in private-sector alternatives. Read more.

Employment: In the year to the first quarter 2024, although the GDP grew only 0.7%, employment reportedly expanded by over half a million. The formal sector accounted for two thirds of the new jobs. Domestic work saw a sharp recovery, but remained below pre-pandemic levels. Changes in employment within manufacturing did not align with industry sales figures, with an unusually sharp decline reported in auto and extraordinary growth in clothing and textiles. Read more.

International trade: Trade continued to normalise as international commodity prices came off the speculative highs seen from 2020 to 2022 while imports gradually recovered until mid-2022. Since then, imports have fallen, due mostly to a combination of slowing growth and softer world oil prices. In manufacturing, foreign auto sales remained strong but coal and platinum exports suffered from a sharp fall in international prices. Read more.

Investment and profitability: Investment fell 1.8% in seasonally adjusted terms in the first quarter of 2024. In consequence, it dropped 6.6% from the second quarter of 2023, when for the first time since the lockdown it exceeded pre-pandemic levels. The investment rate (the share of investment in GDP) fell to 14.8%, down from 15.3% in the second quarter of 2023, 15.5% in 2019, and 18% in 2015. The sharpest fall occurred in private investment, which dropped 3.3% in the first quarter of 2024. General government investment fell by 2.4% and state-owned companies by 1.3%. Read more.

Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published. In the first quarter of 2024, 20 projects were added to the Tracker. Only a handful of projects published investment values this quarter. This resulted in a substantial underestimate in the amount recorded for the quarter – R3.74 billion derived from five projects. Monitoring updated 15 pre-existing projects this quarter. Read more.

Briefing note: The structural crisis in steel - by Neva Makgetla. ArcelorMittal South Africa’s (AMSA) threatened closure of its Newcastle plant underscores the long-term structural crisis in the South African steel industry. For three decades, domestic demand for steel has been essentially stagnant as the steel-intensity of economic growth dropped steadily. Meanwhile, exports declined from 2006 while low-cost mini-mill producers and, to a lesser extent, imports took a growing market share. Read the Briefing Note online: The structural crisis in steel.

Briefing Note: The renewable energy value chain in South Africa - by Gaylor Montmasson-Clair. Renewable energy technologies, principally solar photovoltaic (PV) and wind energy along with battery storage, have had exponential growth over the last two decades. From virtually no solar and wind energy generation capacity worldwide in the 1990s, a total of 375GW of solar energy and 108GW of wind energy were installed in 2023, accounting for the vast majority of new generation capacity. As the cost of renewable energy further declines (and climate policy tightens), this trend is expected to continue for the foreseeable future. Read the Briefing Note online: The renewable emergy value chain in South Africa.