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  • Writer's pictureDr Roelof Botha

On Balance - Economic Update November

Updated: Jan 15

Following several weeks of more abundant electricity supply, the shopping spree associated with Black Friday was met with a resumption of stage 6 load-shedding. A swift return to lower levels of electricity rationing by Eskom may nevertheless be on the cards due mainly to sustained progress with embedded generation by private households and businesses.

Another ray of light is the imminent return to production of unit 2 at the Kusile power station, which had been rendered inoperable by the collapse of its flue duct. Other bad news was the modest increase in the inflation rate, namely from 5.4% in September to 5.9% in October, mainly due to rising food prices.

The upside

Fortunately, the Monetary Policy Committee of the Reserve Bank has not overreacted to the slight uptick in the consumer price index (CPI) and decided to keep their benchmark repo rate on hold.

November’s inflation print should already benefit from strengthening the exchange rate by more than 3% during the first three weeks, namely to a level of R18.45 caused by a slump in the US dollar.

Another reason to be optimistic about the chances of inflation returning soon to the mid-point of the Reserve Bank’s target range is the welcome decline in oil prices. A fortunate combination of a stronger currency and a lower oil price is bound to lead to a further drop in petrol and diesel prices in December.

Motor vehicle exports are booming.

South Africa’s motor vehicle and component manufacturers are going from strength to strength, increasing their contribution to total exports during the first nine months of the year from 9.3% in 2022 to 11.7% in 2023.

In the process, the value of motor vehicle & component exports of R178 billion for the first three quarters of 2023 has elevated the industry into third place in the rankings for export earnings.

This year, only precious metals and mineral products have earned more foreign exchange than the motor industry. The timing of this stellar export growth is exceptional due to the slump in commodity prices, which has negatively impacted mining exports.

Employment rises further

Total employment in the economy has finally recovered to a higher level than before the pandemic, with almost 400,000 new jobs created in the 3rd quarter of 2023.

South Africa Total Employment

The sectors that have been the key drivers of new job creation over the year ended September 2023 are (number of jobs in parentheses): finance & business services (456,000); community & social assistance (235,000); trade & hospitality (145,000); construction (134,000); and agriculture (83,000).

The sustained increase in job creation is welcome news for SA Revenue Services, which may still be able to get close to the budgeted revenue for the current fiscal year.

Bond yield recovers

The recovery of the rand/US dollar exchange rate during November was accompanied by a reduction of 90 basis points in the yield on South Africa’s 10-year sovereign bonds.

The lower bond yield signals a positive capital market reaction to the National Treasury’s mini-budget, which reflected fundamental fiscal stability despite lingering concerns over lower taxation revenues in the current fiscal year.

Higher consumer spending during Black Friday, Cyber Monday and the Christmas holidays will hopefully provide South African Revenue Services with sufficient VAT receipts to avoid any taxation rate increases in February’s central budget for 2024/25.


Dr Roelof Botha

On Balance by Dr Roelof Botha deliberately emphasizes positive news that, more often than not, confirms the resilience of the South African economy and the immense scope for new business opportunities.



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