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PwC’s outlook for SA’s economy is the focus of this edition of the Business Day Spotlight. 

Our host Mudiwa Gavaza is joined by Lullu Krugel, PwC’s chief economist. 

This week, data showed that SA’s economy grew faster than expected, recovering to prepandemic levels in the first three months of 2022 after government rolled back almost all Covid-19 restrictions.

Official data from Stats SA showed GDP grew 1.9% on the first quarter, after an upwardly revised 1.4% rise in the previous period.

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While the GDP numbers are a positive for the economy, Krugel says the reality on the ground is tainted by continued struggles with SA’s biggest economic issues: poverty, inequality and unemployment. 

PwC, which recently published its economic outlook for 2022, says local economic growth is facing a myriad of headwinds this year, including a weaker global environment weighing on export potential, a tightening of domestic monetary policy, a further rise in load-shedding, a series of big fuel price increases, and the adverse effects of local and foreign factors on business supply chains, among other factors.

Krugel says her team is expecting growth for the year to be below 2%, which is in line with other economists forecasts, the median being between 1.7% and 1.9%. 

She says food and fuel inflation, disruptions caused by the floods in KwaZulu-Natal and the Russia-Ukraine war were some of the factors that are likely to be an overall drag on the economy. 

Krugel also talks about the risk of stagflation, which is characterised by slow economic growth and relatively high unemployment — or economic stagnation — which is at the same time accompanied by rising prices or inflation. 

Topics of discussion include: GDP data from Stats SA, whether positive headlines necessarily translate into a good standard of living for South Africans, PwC’s economic outlook for 2022, the risk of stagflation, and global factors likely to continue weighing on the SA economy. 

Engage on Twitter at #BDSpotlight

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Business Day Spotlight is a MultimediaLIVE production.

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