Potentialgrowth estimates for South Africa remain low, with load shedding and capacity constraints weighing on the outlook. South Africa has returned to pre Covid levels of unemployment, recording an
unemployment rate of 31.9% in the third quarter of 2023 Notably, this marks the lowest unemployment rate since the third quarter of 2020. Household finances remain under pressure from higher consumer prices and interest rates. Investment has slowed over recent years. Capital has also depreciated faster since 2010 than has been the case over the long term. In contrast, there has been a significant increase in private sector energy investment. In the MTBPS, the main budget deficit expanded compared to the February budget estimates primarily due to the revenue shortfall. Consequently, both gross loan debt and debt service costs have risen. Gross loan debt is expected to stabilise in 2025/26 at a higher level than projected in the February budget.
African exports lack diversity, with more than 50 of the export value concentrated in only 7 primary sector products. The same is true for South Africa. This supports the Minister of Trade, Industry and Competition Ebrahim Patel‘s comments at the AGOA summit that Africa needs to industrialise beneficiate, and diversify its export market. In terms of industry output growth, the agriculture, forestry and fishing Transport,
storage and communication and Finance and insurance, real estate and businesses services industries all experienced strong growth since 2022. In contrast, the Mining and quarrying Construction Wholesale and retail trade, catering and accommodation industries have not recovered from the pandemic, with output levels still below pre Covid levels. The construction industry recorded the lowest growth in compensation of
employees compared to other industries, averaging only 1.5% since 2022. Comparatively, other industries have seen higher average growth rates in compensation of employees, ranging between 5 and 6.5. Exceptions include the Finance and insurance, real estate and business services industry, along with personal services, which both experienced an average growth in compensation of employees of 3.8 since 2022.
With regard to the tourism industry, tourism accommodation has yet to recover fully from the pandemic. The industry experienced its first negative trade balance with the rest of the world in 2021. Expenditure on inbound tourism by non resident visitors continued to decline in 2021 led by a decline in international visitors.