In the midst of the current environment in which we are experiencing one of the most unprecedented world-wide occurrences of the Coronavirus and the related lockdown measures, it is hard to think and reflect on a time before this.
Following a contraction of -1.4% and -0.8% in the fourth and third quarters of 2019 respectively, the South African gross domestic product (GDP) ended 2019 with an overall real growth rate of 0.2%. This is compared to a real GDP growth rate of 0.8%in 2018.
Growth was constrained by electricity supply shortages, weak business confidence and low public investment. The year-on-year annual consumer price inflation was 4.1% in December 2019. Inflation for the insurance sector, contributing to the consumer price index, was 6.8% year-on-year in December 2019. In 2019 South African consumers struggled under increased fuel prices, higher electricity tariffs and lower earnings. South Africa’s structural problems, including high unemployment and income inequality amongst other social problems, have persisted.
Unstable debt ratios, corruption and the poor financial and operational standing of South Africa’s state-owned enterprises also play a significant role. During 2019 the risk of a Moody’s downgrade overshadowed the economic outlook and business confidence.
© 2021 KPMG Services Proprietary Limited, a South African company with registration number 1999/012876/07 and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.