Page 20 - Provincial Treasury Estimates.pdf

Overview of the Provincial Revenue and Expenditure (OPRE) Financial Year 2023/24
1. SOCIO-ECONOMIC REVIEW & OUTLOOK

INTRODUCTION

The post-pandemic outlook for the domestic economy remains uncertain, characterized by an uneven recovery.
Progress in addressing some of the long lasting economic structural challenges has been slow, especially in electricity
supply and insufficient investments in domestic logistics and ports operations. Altogether these have dampened fixed

investment and growth of key labour intensive industries especially manufacturing and formal agriculture.

At the global level major down-side risks to the economic outlook still relate to disruptions to global trade flows due to
the Russia-Ukraine war and the attendant upward pressures on energy and food prices. Global inflation remains
persistently high reaching 8.8 per cent in 2022, leading to high borrowing costs and thus limiting short-term economic
recovery. The opening of the Chinese economy is expected to, however, provide some reprieve by boosting global
demand.

In light of the expected outlook the most optimal policy responses entail fast tracking growth enhancing structural
reforms to boost medium to long-term economic growth. Sustaining the delivery of social and basic services through
improving implementation capacity and governance will further assist in ensuring that developmental outcomes are
widely shared.

ECONOMIC INDICATORS

Global Economic Growth Outlook

For 2023, global economic activity will largely be influenced by three global events: the reopening of the Chinese
economy, the continuing Russia-Ukraine War, and protracted monetary policy responses to rising global inflation.
Current growth forecasts for 2023 indicate that world economic growth will likely be lower across several major

economies including the United States, euro area, and emerging market economies, following a strong positive upturn
in 2022.

The reopening of the Chinese economy following a prolonged period of lock downs due to COVID-19 outbreaks is
likely to provide some needed support to faltering global demand, limiting the deceleration of global trade and
international commodity prices.

Many countries are expected to continue on a path of countering the effects of higher inflation through increasing short-
term interest rates despite headline inflation seeming to have peaked in some countries.

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