Main Bulletin: The Real Economy Bulletin - First Quarter 2018

In this edition

GDP growth: South Africa’s GDP shrank by an estimated 0.5% in the first quarter of 2018, although the estimated decline may be overstated for technical reasons. The contraction partially offset the gains in growth experienced in the last three quarters of 2017. Read more.

Employment: Employment in the real economy declined by 1.1% between the first quarters of 2017 and 2018, although total employment climbed by 1.2%. Manufacturing employment expanded, but agriculture, construction, utilities saw losses in employment compared to a year earlier. Read more.

International trade: In the first quarter of 2018, South Africa experienced a trade deficit of R18 billion, a change from the trade surplus in 2017. Agriculture experienced the largest percentage decline in exports. In manufacturing, notable export growth was seen in exports of metals and metal products (2%). Read more.  

Investment and profitability: Investment started declining in 2012 with the end of the commodity boom, with an accelerating decline from 2015. In the first quarter of 2018 it was 18% lower than six years earlier. In the year to March 2018, private investment dropped 2%, public enterprises saw no change, and general government investment contracted 5%, reflecting the turn toward austerity. Read more.

Foreign direct investment projects: The number of new projects reported in the TIPS Foreign Direct Investment (FDI) Monitor dropped to four in the first quarter of 2018, down from eight reported a year earlier. Read more.  

Briefing note: Challenges around the GDP data for first quarter 2018: The recent data on the GDP appear to overstate the economic slowdown, as shown among others by a comparison with longer-term trends and employment data. The data show that the economy contracted by just over half a percent (although the release only provides annualised data, showing a 2,2% fall, which is effectively four times the actually decline). Read the briefing note online: Challenges around the GDP data for first quarter 2018.

Briefing note: Map to a Million  - what's the map to a million about? Can the manufacturing sector create a million jobs? The Manufacturing Circle certainly think so and have outlined a process to create a million direct manufacturing jobs over a period of 10 years in their recently released Map to a Million New Jobs in a Decade. Given the current number of people employed in the manufacturing sector, that would equate to creating 4.5% net new jobs in manufacturing each year for the next 10 years. For 2018 that would be just over 80 000 jobs, and all going well it would rise to almost 120 000 jobs in 2028. Read the briefing note online: Map to a Million  - what's the map to a million about?

Briefing note: Desalination - panacea or peril for South Africa? The desalination of water has been identified as a potential source for water in the country. The recent series of droughts has underscored the critical importance of an adequate water supply. In this context, many voices have hailed desalination as South Africa’s cure to water security woes. Critics, however, cite its high cost and potential environmental harm as rendering the technology unfit. Read the briefing note online: Desalination - panacea or peril for South Africa?

This policy brief first assesses the GDP trends and why the latest quarter appears out of step; then reviews the factors that might lead to an overstatement of the slowdown; and finally outlines the longer-term slowdown.

IMMP 2018 3-7 SEPTEMBER 2018: CALL FOR APPLICATIONS

The second edition of the Industrial Policy for Policy Makers (IPPM) training programme will be taking place in September 2018, and will be held alongside the annual African Programme on Rethinking Development Economics (APORDE). This year’s theme for IPPM is: Structural Change, Innovation and Industrial Development.

The programme is a partnership between the United Nations Industrial Development Organization (UNIDO), APORDE, the South African Department of Trade and Industry, and Trade & Industrial Policy Strategies (TIPS). It is aimed at senior government officials from across SADC and will be held in Johannesburg (South Africa) from 3 to 7 September 2018

There is no charge to attend the training, however due to limited places applicants will be accepted through an application process. South African delegates will be required to cover their own transport and accommodation costs. Up to ten delegates from other SADC countries will have their costs of travel and accommodation covered by the programme.

The five-day intensive training course is focused on Industrial Policy and consists of lectures and seminars taught by leading international and African economists. It is of particular relevance given the recent adoption of the SADC Industrialisation Strategy and Action Plan. The programme consists of both daytime lectures and evening lectures. Participants are expected to attend all lectures.

Overview

IPPM will cover essential topics in development economics with a focus on key aspects of industrial policy. Several lectures will be held jointly with the APORDE programme. The training will include sessions on:

• Critical Perspectives on Development Economics
• Market, State and Institutions in Economic Development
• Innovation systems and industrial development
• Learning, Governance and Technology Acquisition
• The developmental state and industrial policy
• Industrial Development in SADC
• Regional Value Chains and Industrial Development

A list of confirmed lecturers includes:

• Chris Cramer (SOAS, University of London)
• Ha-Joon Chang (Cambridge University)
• Mushtaq Khan (SOAS)
• Ben Fine (SOAS)
• Jayati Ghosh (Jawaharlal Nehru University)
• Thandika Mkandawire (London School of Economics)

Applications

Applicants should be senior government officials in SADC countries working in economic ministries / departments and be proficient in English.

The following documents should be sent to Rozale@tips.org.za:

• The completed application form
• A recent curriculum vitae not exceeding 5 pages in length
• A letter from your employer confirming your availability to attend for the full duration of the training
• A motivation to attend (Max. 500 words)

The application form is attached.

The application will close on Friday 27 July 2018 at 8 o’clock in the morning, Johannesburg time. Incomplete or late applications will not be considered.

 Candidates will be notified by e-mail of the outcome of their applications at the latest by early August 2018.

Should you have any queries, please contact: Rozale@tips.org.za

Nokwanda Maseko is a Senior Economist at TIPS. Her work at TIPS is at the intersection of industrial policy, gender and the just transition. Her recent publications include an analysis of the petroleum-based transport value chain for the Sector Jobs Resilience plans and technical reports for the Presidential Climate Change Commission on gender and inequality in the just transition. Before joining TIPS, she worked as a Budget Analyst at the National Treasury and Assistant Director at the national Economic Development Department (EDD) focused on industrial policy.

The rapid growth of trade in environmental goods creates opportunities for South Africa, but is complicated by rising global protectionism, which demands a pro-active strategy to support South African exporters. This policy paper discusses a possible South African strategy for trade in environmental goods. It forms part of a series of papers aimed at providing a barometer of South Africa’s transition to sustainable development.

This Development Dialogue seminar considered different aspects of the corporate landscape and its impact on the economy. For more information and copies of presentations go to Corporate ownership in South Africa. 

Agenda

10:00 - 10:15 Opening and Welcome: Chairperson (Rudi Dicks, DPME) 

10:15 - 12:00 Presentation and discussion of research findings 

• Motivation and Constraints of Corporate Firms in South Africa, Neva Makgetla (TIPS)
• Ownership, Control and Investment in South Africa, Thando Vilakazi and Simon Roberts (CCRED)
• Economic Transformation in the Top 100 JSE listed firms, Duma Gqubule (CEDT)

12:00 - 13:00 Panel discussion with presenters, facilitated by Rudi Dicks

13:00: Lunch

Background

At the birth of its democracy South Africa inherited a highly concentrated economy, dominated by a few large companies. Democracy brought with it the promise of change in the structure of the economy. To what extent have there been real shifts in ownership over the past 20 years? And how do these shifts affect the economy and the broader society? Critical questions relate to the extent of concentrated ownership and the implications for income and asset equality, industrialization, the cost structure of the economy and job creation.

The Development Dialogue will share research undertaken on this important issue and consider different aspects of the corporate landscape and its impact on the economy.

Presenters

Neva Makgetla is a senior economist at TIPS. Makgetla has published widely on the South African economy and worked for many years in government, most recently as Deputy Director General for Policy in the Economics Development Department, as well as in COSATU.

Thando Vilakazi is a senior researcher at the Centre for Competition, Regulation and Economic Development (CCRED). Thando works in the competition field and has worked in the Policy and Research Division at the Competition Commission of South Africa.

Simon Roberts is the director of CCRED and is a professor at the University of Johannesburg, in the Economics and Econometrics Department. He has worked extensively in competition matters and previously held the position of chief economist at the Competition Commission.

Duma Gqubule is the director of the Centre for Economic Development and Transformation (CEDT). Duma has spent the past two decades as a financial journalist, analyst, advisor and consultant on issues of economic development and transformation.

Business Day - 24 April 2018 by Neva Makgetla (TIPS Senior Economist)

Read online at Business Day

Or read as a PDF

Muhammed Patel joined TIPS in 2017. He holds a Masters in Economics from the University of KwaZulu-Natal, where his thesis focused on the relationship between income and health in South Africa. Muhammed’s background spans work in industrial development, and competition and regulatory economics. While completing his Master’s degree, Muhammed worked as a junior researcher at the School of Development Studies conducting research on the manufacturing sector of eThekwini. He also lectured undergraduate economics students over this time. In 2015, Muhammed joined competition and regulatory consultancy Genesis Analytics, where he spent two years working on competition and regulation cases. Notably, his work focused on the telecommunications and energy sectors.

Business Day - 10 April 2018 by Neva Makgetla (TIPS Senior Economist)

Read online at Business Day

Or read as a PDF