SA economy averts a technical recession in Q1 2023
8 Jun, 2023

Herman van Papendorp, Head of Investment Research & Asset Allocation, Tshiamo Masike, Economic Analyst at Momentum Investments and Sanisha Packirisamy, Economist at Momentum Investments


Momentum Investments have released their research note titled, SA economy averts a technical recession in Q1 2023: SA economy averts a technical recession in Q1 2023, prepared by the Momentum Macro Research Team.

In this article is a summary of highlights from the team, as well as a downloadable PDF of the research paper.




  • According to Statistics South Africa (Stats SA), seasonally adjusted (SA) real gross domestic product (GDP) was 0.4% quarter-on-quarter (q/q) in the first quarter of 2023, in line with the Reuters median consensus.
  • The marginal uptick in growth in the first quarter prevented a technical recession following a contraction of 1.1% q/q, sa in the fourth quarter of 2022 (revised up from negative 1.3% q/q, sa).
  • The main contributors to growth on the production side were the manufacturing industry (1.5% q/q, sa, contributing 0.2%) and the finance industry (0.6% q/q, sa, contributing 0.2%). On the expenditure side, growth stemmed from exports (4.1% q/q, sa, with a contribution of 1.1%). However, this was cancelled out by a rise in imports which detracted 1.3% from growth.
  • Growth was positive in eight out of the 10 industries on the production side, supported by low base effects from the previous quarter.
  • The revised growth outcomes (dating back to March 2018) resulted in a shallower contraction in the fourth quarter of 2022. Moreover, the revision lifted the fourth quarter contraction in the finance industry from being a historical low (apart from the pandemic disruption) to the same level as the first quarter of 2019.
  • The challenging operating environment, due to idiosyncratic factors such as the energy crisis, is stifling economic activity from meaningfully surpassing pre-pandemic levels.
  • The heightened likelihood of stage 8 loadshedding during winter, as announced by Eskom, will further dampen growth prospects, particularly because the economic cost associated with higher stages of loadshedding is much higher than lower stages. The SA Reserve Bank (SARB) estimated that the nominal cost of stages 1 and 2 varies between R0 to R1.2 million and is exponentially higher from stages 3 to 6 (between R204 million to R899 million) when continued on a 24-hour basis on weekdays.
  • Improvement in the intensity and severity of loadshedding is largely dependent on repairing the broken units at Kusile and Medupi and bringing the Koeberg unit online. The power generated by these units is equivalent to almost four stages of loadshedding.
  • Further risks to the growth outlook in the medium term include global recession risks, the outcome of the 2024 national elections, increasing concerns about SA’s foreign policy stance, softer commodity prices, depressed consumer and business sentiment and inefficiencies in SA’s network industries.
  • With a high severity and frequency of loadshedding largely unavoidable in the coming months due to large units of Eskom’s generation capacity being offline, activity is likely to stall in the local economy this year. We expect growth to drift higher from 0% in 2023 to 1% in 2024 and 1.6% in 2025 as operational constraints such as macro research and asset allocation | gdp | June 2023 Page 2 of 5 loadshedding and logistics are reduced in line with efforts from Operation Vulindlela in conjunction with private sector investment.


Download the full report – click here






@Herman van Papendorp
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@Tshiamo Masike
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@Sanisha Packirisamy
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