25 August 2022 www.oecd.org/economy/south -africa-economic-snapshot/ @OECD 2022 OECD ECONOMIC SURVEY OF SOUTH AFRICA Fostering an inclusive and sustainable recovery @OECDeconomy
2 South Africa has stepped up its social measures to mitigate the impact of the pandemic Source: National Treasury Budget Review 2020, 2021 and 2022; OECD calculations.
The economy is recovering slowly
3
Source: OECD Economic Outlook database. Real GDP Index 2015 Q1 = 100
Food and energy prices have soared 4 1. Core inflation excludes energy and food products. Source: OECD Economic Outlook database; OECD consumer price indices database; Statistics South Africa; and OECD calculations. Inflation Y-o-y % changes
After a strong rebound, the recovery is set to be sluggish 5 Annual percentage change, unless noted otherwise 2020 2021 2022 2023 Gross domestic product -6.4 4.9 1.8 1.3 Inflation 3.3 4.6 6.3 5.8 Unemployment (% of the labour force) 29.4 34.3 34.5 34.0 General government gross debt (% of GDP) 70.7 69.5 72.8 74.4 Source: OECD Economic Outlook database; National Treasury.
Note: Loadshedding is implemented in stages with more frequent power cuts at higher stages. At every stage of loadshedding, Eskom rations the country by a further 1 000MW of power. Stage 1=1 000 MW, stage 2 = 2 000 MW, stage 3 = 3 000 MW, stage 4 = 4 000 MW, stage 5 = 5 000 MW, and stage 6 = 6 000 MW. For 2021, hours of loadshedding by stage were calculated by multiplying the proportions approximated in initial calculations from CSIR as of November 2021 by total hours of loadshedding in 2021.
Source: Eskom; Council for Scientific and Industrial Research, South Africa; Statistics South Africa; OECD calculations.
Yearly hours of load shedding by stages and total annual supply
The availability of electricity has fallen dramatically, hurting firms 6
7 The slow vaccination rollout poses a risk in case of a new wave Note: Data for Brazil on 24th of July 2022, for China and Mexico on 22nd of July 2022, and for Indonesia on 26th of July 2022. Source: Our World in Data; OECD calculations. Share of total population vaccinated On 30th of July 2022
Note: The baseline scenario extends the short-run economic outlook with a growth rate of 1.5% from 2024 and a gradual improvement of the primary balance to 0.5% of GDP from 2023. The structural reform scenario boosts GDP growth to 2.5% from 2024. The spending control strategy scenario combines a primary surplus of 1% of GDP from 2022 with the baseline scenario. The structural + tax reforms scenario takes into account the effects of implementing structural reforms that would increase potential growth to 2.5% from 2024 and tax reform that would increase the primary surplus to 1% of GDP from 2024.
Reforms are necessary to reduce the debt level
Source: National Treasury, Budget Review 2022 and OECD calculations.
Gross debt in % of GDP
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Government exposure to State-Owned Enterprises represents a significant fiscal risk Note: Index scale from 0 to 6, from most to least competition-friendly regulations. Source: OECD Product Market Regulation database. The scope of SOEs is large 9
Tax revenues are relatively low 10 Tax-to-GDP ratio % of GDP, 2019 Source: OECD Tax database.
Source: South African Revenue Service, Tax Statistics, 2021; and OECD calculations.
Note: The 350-500K category is likely biased as it combines two income tax brackets with different PIT rates. The data do not allow to separate them.
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Tax deductions mostly benefit high-income earners
Deductions by income group 2019
Wealth tax collection remains limited 12 Source: South African Revenue Service, Tax Statistics 2020. Revenues from different wealth taxes
The VAT rate is relatively low 13 1. Average of OECD countries with available data. Source: OECD Consumption Tax Trends 2020. Standard VAT rate 2018
The share of taxed emissions is low 14 1. Average of OECD countries with available data. Source: OECD (2021). Effective Carbon Rates 2021, http://oe.cd/ECR2021. Emissions priced in percentage of total emissions Emissions priced above EUR 30 per ton of CO2, 2018
Productivity is lagging behind 15 Total factor productivity growth Index 2000 = 100 Source: OECD Productivity database; OECD Analytical Database; and OECD calculations.
Road quality needs to improve 16 Source: World Health Organisation. Road fatalities Per 100 000 people, 2019
Access to broadband is costly 17 Source: speedtest.io; cable.co.uk. Broadband cost and speed 2020
Regulatory barriers to competition in network industries are high 18 Source: OECD Product Market Regulation Database. Product Market Regulation indicators for network sectors 2018, index scale 0-6 from least to most restrictive
Education outcomes could be improved 19 Source: OECD calculations from PISA 2018 and TIMSS 2019. PISA math score at 15/grade 8, OECD and emerging countries
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For more information 20 @OECD@OECDeconomy www.oecd.og/economy/south -africa-economic-snapshot/ TheDisclaimers:statistical
