South Africa’s Q2’23 FDI inflows rose to R53.8bn

South Africa's economy showed signs of resilience in the second quarter of 2023, with foreign direct investment (FDI) inflows reaching R53.8 billion. The acquisition of Distel by Heineken played a significant role in driving up these numbers, according to the South African Reserve Bank. Iaan Venter, Head of the Business Cycle Analysis Unit in the Economic Statistics Department at SARB, shared insights into the country's economic performance during this period. The quarterly report, totaling a hefty 304 pages, highlighted various aspects of South Africa's macroeconomic landscape up to June. Despite challenges such as load shedding, the economy saw a slight acceleration in growth from 0.4% in the first quarter to 0.6% in the second quarter. Key sectors like agriculture, mining, manufacturing, and finance performed well, while areas like electricity and construction experienced contractions. The impact of load shedding was evident in sectors like electricity, gas, and water, prompting increased investments in alternative energy sources. The transport sector also faced challenges due to truck torches, affecting its performance. Venter emphasized the importance of foreign direct investment inflows, which saw a significant boost in the second quarter. The acquisition of Distel by Heineken contributed to this, along with loan repayments between non-resident subsidiaries and resident parent companies. Corporate activity played a vital role in driving up these numbers. The report also highlighted household financial trends, with disposable incomes increasing by 62.5%, albeit with rising debt levels. Household consumption expenditure contracted, reflecting the impact of inflation and higher interest rates. On the positive side, the private sector showed signs of strength, with savings rates rising, particularly driven by corporates. Despite lower investment in fixed assets, corporates focused on repaying loans, indicating a healthy financial position. Private sector investment, especially in machinery and equipment, played a crucial role in bolstering fixed investment numbers. Companies invested in energy-related equipment to mitigate the effects of load shedding, showcasing resilience and adaptability. This increased investment is expected to make the economy more robust in the face of challenges like power outages. Moving forward, the impact of these investments is anticipated to positively influence economic activity in the coming quarters. Venter's insights shed light on key aspects of South Africa's economic performance, emphasizing the importance of corporate activity and private sector resilience in driving growth and stability.