The National Treasury has hinted that it could possibly revise downwards South Africa’s growth forecast for 2023 as the country teeters on the brink of an economic recession on the back of the persistent energy crisis.
Deputy Finance Minister David Masondo yesterday said the Treasury would announce a further update on its projections in the Medium-Term Budget Policy Statement in October.
This comes as the International Monetary Fund has projected growth of 0.1% for 2023, which is lower than the National Treasury’s projected growth of 0.9%.
There are other more recent projections on growth in 2023, and market consensus is currently for growth of 0.6% in 2023.
Masondo said one of the major reasons for South Africa’s poor economic performance has been supply-side constraints – supply of electricity, skills, telecommunications, transport logistics and water.
He said the ongoing energy supply crisis – load shedding – was the most important challenge facing South Africa today, and that its intensification could push the economy deep into recession.
“While growth projections are low and risks are high, the likelihood of a recession will largely depend on the impact of load shedding along with high inflation, rising borrowing costs, and weak external demand,” Masondo said.
“Nevertheless, our economic growth is still very poor. With currently high levels of unemployment, clearly there is a need to fast-track policies required to stimulate economic growth. Otherwise, a continued slowdown in economic growth will worsen poverty and inequality.”
Masondo was speaking at the launch of upgraded banknotes and coins into the market by the South African Reserve Bank (SARB), which will be introduced incrementally.
The upgraded banknotes and coin have enhanced security features and new designs. However, the broad themes for the upgraded banknotes remain the same as the current banknotes, while the theme for the coin is deep ecology.
The denominations are introduced to support the integrity of and trust in the country’s currency by assisting with the fight against counterfeiting, which is essential for maintaining financial stability, investment, economic growth and confidence in the financial system.
Currency counterfeiting is costly for the economy and for society as a whole as it could generate an increase in the supply of money, and thus cause inflation and erode the purchasing power of the rand.
SARB Governor Lesetja Kganyago said the banknotes continued to pay tribute to South Africa's first democratically elected president, Nelson Mandela, with his portrait retained on the front of the banknotes while the Big 5 animals were now illustrated as a family on the back.
Kganyago said the banknotes and coin were regularly upgraded in line with international best practice to combat counterfeiting and to stay abreast with technological advancements.
“In general, banknotes are refreshed in intervals of six to eight years and coin in intervals of 20 to 30 years. In South Africa, the current Mandela banknote series was issued in 2012 and a commemorative series of banknotes was issued in 2018. The current coin series was issued in 1989,” he said.
“The SARB does not demonetise its currency. The upgraded notes and coin will have the same value as the current notes and coin in circulation and I want to encourage the public to transact with them.”
Kganyago reiterated that load shedding alone had deducted at least 2 percentage points from the SARB’s growth forecast this year.
“But load shedding also contributed to something else. It started to also erode the income of South Africans because load shedding has also led to inflation being higher than it would otherwise have been,” Kganyago said.
“We estimated that inflation this year would be 0.5% higher as a result of load shedding, and those figures are swapped because there are a lot of other things happening.”
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