Foreign investment slumps in fourth quarter
JOHANNESBURG– South Africa (SA) recorded smaller foreign direct investment (FDI) inflows of R16.2 billion in the fourth quarter of 2023, from R26 billion in the third quarter, central bank data showed last week.
For 2023 as a whole, FDI fell to R96.5 bilion from R151bn in 2022, as equity investment by foreign parent companies in domestic companies slowed, the South African Reserve Bank’s Quarterly Bulletin showed.
Economic activity in SA remained stagnant in the fourth quarter as real gross domestic product (GDP) expanded by only 0.1 per cent following a contraction of 0.2 per cent in the third quarter. On an annual basis, GDP slowed significantly from 1.9 per cent in 2022 to 0.6 per cent in 2023, weighed down by energy and logistical constraints, as well as lower domestic and global demand.
The net flow of capital on SA’s financial account of the balance of payments switched to an outflow of R1.1bn in the fourth quarter from an inflow of R39.7 billion in the third quarter. All financial account categories, except portfolio investment, recorded inflows.
Fell
SA’s total external debt increased slightly to US$156.1 billion (R2.9 trillion) at the end of September 2023, from US$155.5 billion at the end of June 2023. However, in Rand terms, external debt fell slightly to R2.93 trillion from R2.94 trillion as the rand exchange value appreciated against the US Dollar.
On an annual basis, households’ net wealth increased marginally relative to their disposable income in 2023, with net wealth steady at around 3.9 times the value of their annual disposable income in both 2022 and 2023.
Households’ net wealth was supported by JSE share prices in 2023 - the All Share Index increased 5.3 per cent in rand terms in 2023 compared with a decline of 0.9 per cent in 2022 - and, to a lesser extent, by the higher value of housing stock.
Growth in nominal residential property prices remained subdued and slowed further in 2023, remaining below headline consumer price inflation.
Real final consumption expenditure by households, supported by a marginal increase in real disposable incomes, increased by 0.2 per cent in the fourth quarter following two successive quarterly decreases.
Spending
Real outlays on services and durable goods reverted to an increase in the fourth quarter of 2023, with the latter led by higher spending on personal transport equipment; computers and related equipment; as well as recreational and entertainment goods.
A contraction in household spending on non-durable goods was broadbased, while the reduced outlays on semi-durable goods reflected lower spending on motorcar tyres, parts and accessories; clothing and footwear and miscellaneous goods.