BusinessTech
South Africa’s economic growth is slowing once more, with low economic growth levels projected over the medium term standing in stark contrast to a healthier global economy, says financial services firm PwC.
Current forecasts for real GDP growth for South Africa stand at 2% this year, with expectations that growth will converge around 1.5% per annum over the long term.
This is the country’s potential economic growth rate, given current fundamentals and structural constraints, PwC said. In turn, the group expects the global economy to grow at a healthier long-term rate of 2.6% per annum.
“If these growth rates could be translated into the speed at which a car travels, South Africa would be driving at 60 km/h while the global average is above 100 km/h.”
PwC said that despite the economy bouncing back in 2021 as GDP expanded to 4.9% – even before the Russian invasion of Ukraine sent shockwaves through the global economy – local economic growth was expected to moderate to a significantly lower level.
When compared to E7 emerging economies, South Africa is being outperformed, showing that there are opportunities for growth through engagement with these areas.
The E7 includes some of the largest emerging markets, like Brazil, China, India, Mexico and Turkey – many with growing middle classes and resource wealth to drive their future economic development.
Emerging economies are forecast to grow by a healthier 3.4% this year and 4.2% next year. This group’s long-term growth outlook is higher at 4.5% per annum despite the inclusion of Russia within this cohort, said PwC.
“If South Africa is cruising at 60 km/h over the long term, this group would be speeding ahead at 180 km/h.”
The G7 developed economies are expected to record real GDP growth of 2.4% in 2022 and 1.6% in 2023 as their post-pandemic recoveries continue, said PwC.
The long-term growth outlook for this grouping is an average expansion rate of 1.4% p.a. — very similar to South Africa’s long-term trend.
Five factors
PwC listed the following key international factors that are having an effect on the local economy:
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