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The Durban EDGE Team
February 2023


South Africa recorded higher than anticipated GDP growth of 1,6% in 2022Q3, after contracting by 0,7% in the previous quarter. Eight of the ten industries contributed to this growth with agriculture being the largest. The other drivers of growth were the finance, transport, and manufacturing sectors. SA’s economy has since recovered from the impacts of the COVID-19 pandemic, and with size of the economy now exceeding pre-pandemic levels by 5,3%; the country posted a GDP of R1 111 billion in 2019Q1 and R1 170 billion in 2022Q3.

Durban’s economy grew by 1,6% in the third quarter of 2022 after contracting by 0,8% in the second quarter. All industries in Durban except electricity and community services reported growth for the quarter.

The third quarter expansion of Durban’s GDP comes despite the prolonged impacts from the floods during April 2022. The City was spared the burden of the rolling blackouts for part of the third quarter, to alleviate the impact of the floods. Durban’s GDP growth may also be attributed to the various interventions undertaken by the City so businesses could resume normal operations as soon as possible.

Figure 1: Sector contributions to GDP 2022Q2 vs. 2022Q3

Source: IHS Markit,2022Q3

While most industries grew, it is not surprising that the electricity, gas, and water sectors reported negative growth of -0,04 % in 2022Q3. This negative growth is a result of the water and persistent electricity challenge faced by the city which has been a major setback on Durban’s recovery and posed a strain on further improvement.

The Durban Business Confidence Index[1]was reported as 44,04 for 2022Q4, and when below 50, usually denotes a negative sentiment in the economy. The poor service provision from the electricity, gas, and water sectors were contributors towards the lack of confidence in Durban during the quarter surveyed, according to the Durban Chamber of Commerce and Industry as reported.

The electricity supply disruptions are affecting industrial productivity, operations, and economic growth within the city, and if not addressed urgently by national government may result in further loss of production and investor confidence in the country.

[1] The Durban Business Confidence Index (DBCI) was officially launched during October 2022 in partnership with the Durban Chamber of Commerce and Industry NPC, eThekwini Municipality, and the University of KwaZulu-Natal. The Index measures the sentiment of business leaders in conducting their day-to-day business. It is a leading indicator that reflects the current economic situation, future direction of commerce, monitors output growth and presents a warning of economic activity turning points.

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