South Africa’s Economy in Q2-19: Fragile still?


Recently, the South African Reserve Bank (SARB) published its Q2-19 statistical bulletin. According to the report, real economic activity rebounded during the period, up 3.1% q/q and 0.9% y/y in Q2-19 compared -3.1% q/q and 0.0% y/y in Q1-19. This was buoyed by the improvement in the power situation of the country that had hampered output in Q1-19. Also, the report showed that Foreign Direct Investment (FDI) inflows rose from c. $0.8bn in Q1-19 to $1.8bn in Q2-19 as domestic firms received debt and equity funding from foreign parent companies.

However, the report showed that the S/Africa’s official unemployment rate increased markedly to 29.0% in Q2-19 – the highest since the inception of the Quarterly Labour Force Survey in 2008. This was worsened by a significant number of new entrants and previously discouraged work-seekers actively searching for jobs which entered the labour market and elevated the number of unemployed people to a new all-time high.

South Africa’s trade balance with the rest of the world switched from a surplus in Q1-19 to a deficit in Q2-19, as the increase in the value of net gold and merchandise exports was less than that of imports. In all, investor confidence in South Africa remains fragile, while the economic growth outlook is clouded by a lack of clarity and progress on reforms.

United Capital Plc Research (UCR)