South Africa recorded smaller foreign direct investment (FDI) inflows of R16.2 billion in the fourth quarter of 2023, from R26bn in the third quarter, central bank data showed last week.
For 2023 as a whole, FDI fell to R96.5bn 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 South Africa remained stagnant in the fourth quarter as real gross domestic product (GDP) expanded by only 0.1% following a contraction of 0.2% in the third quarter.
On an annual basis, GDP slowed significantly from 1.9% in 2022 to 0.6% in 2023, weighed down by energy and logistical constraints, as well as lower domestic and global demand.
The net flow of capital on South Africa’s financial account of the balance of payments switched to an outflow of R1.1bn in the fourth quarter from an inflow of R39.7bn in the third quarter. All financial account categories except portfolio investment recorded inflows.
South Africa’s total external debt increased slightly to $156.1bn (R2.9 trillion) at the end of September 2023, from $155.5bn at the end of June 2023. However, in rand terms, external debt fell slightly to R2.93trlfrom R2.94trl 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% in rand terms in 2023 compared with a decline of 0.9% 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 0.2% in the fourth quarter following two successive quarterly decreases.
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 broad-based, while the reduced outlays on semi-durable goods reflected lower spending on motorcar tyres, parts and accessories; clothing and footwear; and miscellaneous goods.
Household debt as a percentage of nominal disposable income decreased slightly to 62.3% in the fourth quarter of 2023 from a revised 62.4% in the third quarter.
Real gross fixed capital formation contracted marginally further in the fourth quarter as the public sector further reduced fixed investment spending, while capital spending by the private sector remained unchanged.
Measured by asset type, real fixed investment spending decreased on all asset categories except for non-residential buildings and other assets, which comprise research and development, computer software, mineral exploration and cultivated biological resources.
Total real capital expenditure increased by 4.2% in 2023, marking the third consecutive annual increase. Consequently, the ratio of nominal gross fixed capital formation to nominal GDP increased to 15.2% in 2023 from 14.2% in 2022.
BUSINESS REPORT