South Africa’s economic outlook has taken a downward turn, as the Bureau for Economic Research (BER) announced a reduction in the country’s growth forecast for 2023. The Stellenbosch-based research body has revised its expected growth rate from 2% to 1.5%, aligning its predictions with the median estimate from a survey of 27 economists by Bloomberg.
At a briefing held in Johannesburg on Tuesday, BER Chief Economist Lisette IJssel de Schepper highlighted a combination of domestic political instability and the ongoing tariff controversies led by the United States as key contributors to this revised outlook. The currents of uncertainty are particularly pronounced within the nation’s ruling coalition government, a ‘government of national unity’ that emerged following the African National Congress (ANC)’s (loss of its outright majority in the previous year’s elections.
The young coalition government has faced considerable challenges, including a prolonged dispute over the national budget that nearly led to its collapse. The proposed spending plan has already been scrapped twice due to resistance surrounding tax increases, and it now undergoes revision after a suspension imposed by the High Court.
“As tensions mount, the National Treasury is set to present its third budget iteration to lawmakers on May 21. De Schepper expressed concern, stating, “We are worried about whether the coalition government will hold and function effectively.”
Looking back to the second half of the previous year, there was cautious optimism regarding government reforms that hinted at an upward momentum for economic growth. “We saw some progress on the reform front, and the government was starting to add positively to growth momentum,” De Schepper noted. However, that sentiment has now shifted in light of recent developments.
“Compounding these challenges is the impact of US President Donald Trump’s tariff war, notably the 10% universal tariff that is destabilising global trade relationships. De Schepper remarked, “Some of the puzzles of growth were moving into place, but Trump has swooped some of the puzzle pieces straight off the table.”
As South Africa grapples with a dire mix of internal turmoil and external pressures, the effects of these economic forecasts are likely to be felt across various sectors, putting greater strain on an already fragile economy.