The graph depicts South Africa’s (SA) Gross Domestic Product (GDP)growth from 2019 to 2023, both quarter-on-quarter and year-on-year. In the last quarter of 2023, the economy witnessed a modest quarter-on-quarter uptick in real GDP of 0.1%, recovering from a slight contraction of 0.2% in the previous quarter. Annually, growth for 2023 stands at a subdued 0.6%, a decline from the1.9% expansion recorded in 2022. This trend signals a relatively stable economy, which has returned to a path of growth albeit at a slow pace. The recovery trajectory is neither strong nor robust but instead gradual and incremental. The overall picture is one of tempered progress without significant ups or downs in economic output in 2023.
In the last quarter of the 2023, GDP showed positive growth across six industries. Notable observed in three top sectors, namely: transport (2.9% increase, contributing 0.2 percentage points to GDP growth), community services (0.9%increase, contributing 0.1 percentage point), and finance (0.6% increase, contributing 0.1 percentage points). However, the trade sector experienced the largest contraction, decreasing by 2.9% and pulling down GDP growth by 0.3 percentage points. It's important to note that despite the increase in the last quarter, overall annual growth remained subdued and lower than the previous year. Durban’s sector performance closely mirrors that of national sectors.
In 2023, Durban’s economic growth began with a modest 0.5% increase in the first quarter. This initial rise persisted into the second quarter, with 0.5% growth. However, the city’s economic momentum stalled in the third quarter, with no growth recorded. In the fourth quarter, momentum recovered with a marginal increase of 0.1%. The pattern reflects both the resilience and vulnerability of the Durban economy to local challenges and wider economic pressures.
In 2021, all cities experienced positive GDP growth as they recovered post-COVID-19. Growth remained positive in 2022 across all cities, but there was a slight moderation in growth rates compared with the previous year. Durban saw positive growth, though at a slower pace than other cities.
By 2023, a further slow down in GDP growth rates was observed across all cities, ranging from 0.3%to 0.9%. Durban saw the least growth after Tshwane with 0.5%. Durban contributed R460 billion to South Africa’s GDP of R4.626 trillion in 2023, marking a slight decrease in its share from 10.08% in 2018 to 9.96% in 2023.
Durban has faced civil unrest, and as a coastal city vulnerable to natural disasters, it has experienced disruptions. Particularly floods have damaged infrastructure and reduced productivity, impacting GDP growth from 2021 to 2023. These incidents have disrupted economic activities, damaged infrastructure, and affected productivity, leading to lower GDP growth during the affected periods.
The city’s GDP was valued at R460 billion constant price in 2023 – the same value as five years ago, in 2018. This stagnation can be attributed to a variety of factors including limited investment, which has kept growth in the city below 2019 levels. The city’s economy has a different sectoral composition than the other major metros with reliance on sectors like tourism, especially the hospitality sub sector, and manufacturing. Stagnant growth is also attributed to sluggish sectors such as electricity and water, which witnessed slower growth or contractions in 2023.
Despite these setbacks, there are indications of a potential economic recovery in Durban. Notably, sectors such as transport, finance, and community services were among the top contributors in 2023, with the same sectors, as well as construction, expected to drive growth in 2024.
Looking ahead to 2024, there are still opportunities in trade, particularly exports, which remains largely untapped. Projections for 2024 suggest a modest recovery, with an anticipated increase in GDP growth to 0.9% (GDP value of R463 billion), gradually approaching the pre-pandemic levels of about 1% annual growth. This expected improvement indicates cautious optimism for Durban’s economy, suggesting it may start to recover from its recent stagnation and begin to align with broader economic recovery trends.
In 2023, both South Africa and Durban experienced a slow economic recovery, influenced by modest gains and sector-specific resilience amid significant challenges. High inflation and rising interest rates continued to pressure consumers, contributing to a high cost of living and challenging business conditions across the nation. These economic headwinds restrained growth and hindered economic development. While the national GDP showed slight improvement, Durban’s progress in recent years has been particularly affected by its vulnerability to natural disasters, unrest and infrastructural issues. Despite these difficulties, sectors like transport and finance provide hope fora gradual return to pre-pandemic growth levels. However, Durban still trails other major metros, highlighting the need for targeted economic strategies to overcome persistent hurdles and fully capitalize on its economic potential.
1. S&P Global Regional eXplorer (ReX); 2024: http://www.ihsmarkit.co.za/Products/ReX/
2. Statistics South Africa. (2023). Gross domestic product survey. Available at: https://www.statssa.gov.za/publications/P0441/P04414ndQuarter2023.pdf
Ref: Economic Researcher Sine.Mhlongo@durban.gov.za
