Local economic growth is facing a myriad of headwinds this year including a weaker global environment weighing on export potential, a tightening of domestic monetary policy, a further rise in electricity load-shedding, a series of big fuel prices increases, and the adverse impact of local and foreign factors on business supply chains.

This is according to the fifth South Africa Economic Outlook report from PwC, which forecasts real economic growth of 3,7% in South Africa’s key trading partners during 2022, down from a January projection of 4,7%.

Lullu Krugel, chief economist at PwC South Africa, says: “South Africa’s key trading partners include some of the world’s largest economies, including China and the euro area. These economies are currently facing a multitude of headwinds, including rising interest rates, supply chain disruption, resurging Covid-19 waves, as well as producer and consumer inflation at the highest levels in decades.”

Over the past three months, the main factors disrupting local import supply chains were the Russian invasion of Ukraine, Covid-19 lockdowns in China, flooding in KwaZulu-Natal, and increased local electricity load-shedding.

Christie Viljoen, senior economist at PwC South Africa, adds: “Supply chain pressures are now more intense than seen during the worst of the Covid-19 pandemic and the global financial crisis of 2008-2009. This requires companies to evaluate the resilience of their supply chains to continue providing goods and services.”

Key content in the fifth edition includes:

Macroeconomic environment

* Progress in getting economic activity back to pre-pandemic levels.

* Updated forecasts as the rand weakens and interest rates climb higher.

Exports

* Top sellers have a strong GDP impact, but offer limited support for job creation.

* Weaker global economic outlook negatively weighs on the outlook for South African exports.

* Rising commodity prices provide opportunities, but production costs are also increasing.

Imports

* Supply chain pressures are now higher than during the worst of Covid-19.

* In a world of disruption, food and energy products see the biggest cost increases.

* Actions to bolster supply chain resilience during times of disruption.