FINANCE

Factories and wholesalers boost GDP in 3rd quarter

The only surprising aspect of the 1.6% GDP growth rate during the 3rd quarter of 2022 was that it took many so-called “analysts” by surprise.

Any economist worth his or her salt would have seen positive economic growth coming from a fair distance, as key contributing sectors such as wholesale and manufacturing have been gearing up for the traditional 4th quarter spending spree that always takes retail sales to new record heights - in the absence of a pandemic, of course!

During the 3rd quarter, manufacturing sales increased by more than 19% in nominal terms and almost 12% in real terms, reaching an all-time record high and finally staging a full recovery from the Covid pandemic. The 3rd quarter sales figure of R776 billion was marginally higher than the previous record of R772 (in real terms), achieved in the 3rd quarter of 2019.

The increase in manufacturing activity may be attributed, in part, to the strength of the US dollar, which led to a switch amongst wholesalers and retailers alike to the procurement of locally made goods, due to the substantial increase in the prices of imported goods.

A rampant wholesale sector has been busy laying the tables of retailers for the inevitable spike in household consumption expenditure that is associated with Black Friday, Cyber Monday and Christmas shopping in general. During the 3rd quarter, wholesale sales increased by 16% quarteron-quarter and by 9% year-on-year, in real terms, to reach an all-time record high of more than R900 billion. A further clue to the inevitability of positive GDP growth in the 3rd quarter is the sustained upward trend in new job creation, with total formal sector employment rising by more than one million during the first nine months of the year.

Although more muted than during the first two quarters of the year, another 235,000 new formal sector jobs were created between July and September. Total employment in the economy has now moved from 14.3 million a year ago to almost 15.8 million, with the major contributing sectors being retail, wholesale and catering, manufacturing, construction and mining.

No doubt exists over a continuation of positive growth in the last quarter of the year, which will be fueled by retail trade and the impact of Christmas bonuses earned by a larger workforce. Consumption expenditure by households is the main driver of economic growth around the globe. In South Africa’s case, this dominant demand component represents more than 62% of GDP.

The latest economic data will provide cheer to National Treasury, with VAT and income tax receipts likely to exceed the budget estimates by a considerable margin. �

Dr Roelof Botha, Economic Advisor to the Optimum Investment Group

*SHOP-SA will have a forecast on 2023 and the budget expectations in our February edition.

ACKNOWLEDGEMENT

Dr Roelof Botha, Economic Advisor to the Optimum Investment Group (12 December 2022)

2023 is HERE - are you READY?

Bernard Marr is a futurist who looks at how technology will influence our lives, the way we do business and live – he wrote an article for Forbes.com and here are some of the highlights.

Ten essential tech trends you should be following in 2023

1. Easy drag and drop

Artificial intelligence (AI) will become real in organisations. AI, with its easy dragand-drop interfaces, will enable businesses to create more intelligent products and services. According to Bernard this is already visible in the retail market where algorithms recommend products that match tastes and sizes.

Contact-less, autonomous shopping and delivery will continue to be a huge trend for 2023 and AI makes this all easier. More retailers will use AI to manage and automate the complex inventory management processes to increase convenience trends like buy-onlinepickup-at-curb side (BOPAC), buy-onlinepickup-in-store (BOPIS), and buy-onlinereturn-in-store (BORIS), will become standard.

2. Metaverse

Many of us don’t understand the term “metaverse” – it is the description for a more immersive internet where we’ll be able to work, play, and socialise on a persistent platform.

According to the article, experts predict that the metaverse will add $5 trillion to the global economy by 2030, and 2023 will be the year that defines the direction of the metaverse for the next decade. Augmented reality (AR) and virtual reality (VR) technology will continue to advance. One area to watch is the work environment in the metaverse. Bernard predicts that in 2023 we’ll have more immersive meeting environments where we can talk, brainstorm, and co-create together.

The new year will also bring more advanced avatar technology. An avatar — the presence we project as we engage with other users in the metaverse — could look exactly like we do in the real world. The avatar will have motion capture abilities to adopt our unique body language and gestures.

3. No more clouds

Bernard believes that block chain technology will also advance significantly in 2023 as companies create more decentralised products and services. Although cloud storage is currently the way we protect our information and data, we will start to decentralise data storage. Data will be encrypted using block chain which will make our information safer, and will give us more innovative ways to access and analyse it.

4. Bridging two worlds

Bernard says that we are already seeing an emerging bridge between the digital and physical worlds and he expects that will continue in 2023. According to him there are two components of this merger: digital twin technology and 3D printing.