Growth in Southern Africa is expected to remain tepid in 2022, declining to 2.5 percent, from 4.3 percent in 2021, reflecting persistent weaknesses in South Africa, the region’s largest economy and main trading partner.

South Africa’s real GDP growth more than halved to 1.9 percent in 2022 from 4.9 percent in 2021, due to the subdued global demand, power outages, and devasting floods that affected industrial production in KwaZulu-Natal.[i] A build-up in inflationary pressures also affected household consumption spending, a key driver of growth in South Africa. South Africa’s close trade ties with other countries in Southern Africa means that shocks buffeting the country are directly or indirectly transmitted to the rest of the region. In particular, countries in the Common Monetary Area[ii] and the Southern African Customs Union (SACU)[iii] experience near symmetrical shocks to those affecting South Africa.

Elsewhere in the SACU area, growth was above 2 percent, except in eSwatini, whose growth of 1.3 percent was even lower than for neighboring South Africa.

Fed by sustained recovery in tourism inflows, Mauritius real GDP grew the fastest at 7.0 percent in 2022.

Real output in Angola, the region’s second largest economy, expanded by 2.9 percent in 2022, supported by high prices of oil and other minerals.

Mozambique, which has been battling multiple shocks—including insurgency in Cabo Delgado region, lingering effects of cyclone Idai, and bouts of high inflation—posted 3.8 percent growth in 2022. Cessation of hostilities in Cabo Delgado is key to boosting investment in liquefied natural gas and other allied industries, for associated social benefits in surrounding areas.

Growth is accordingly projected to accelerate to 5.0 percent in 2023 and 8.0 percent in 2024. In the medium term, however, persistent weakness in South Africa will continue to weigh on the region, with real output projected to decelerate to 2.3 percent in 2023 before rising to 2.8 percent in 2024, largely reflecting broad-based improvement in economic conditions, led by Mozambique, whose economy is projected to expand by 3 percentage points to 8 percent.

• According to Statistic South Africa, KwaZulu-Natal accounted for a fifth of the South Africa’s manufacturing in 2019.
• Common Monetary Area—Eswatini, Lesotho, Namibia, and South Africa. The Lesotho and Namibian currencies trade at par with the South African rand and circulate freely in these countries.
• The SACU, comprising Botswana, Eswatini, Lesotho, Namibia, and South Africa, provides for common external and excise tariffs to this common customs area and the revenue collected in the bloc area is shared among members according to a revenue-sharing formula, as described in the agreement establishing the block.