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GFCF to GDP ratio declined from 19% in 2012 to 13% in 2021, but rose to 15.5% in Q2 2023. In Q2, GFCF increased by 3.9% on a q/q seasonally adjusted basis, driven by a private sector investment growth of 5.7% (12-year high). This reflects a possible reversal of the downward trend that has been weighing down the South African economy. Investment in machinery and equipment grew by 4.4%, which was the main contributor to the improvement in GFCF. See chart below
South Africa's infrastructure investment is experiencing a significant boost due to various factors, including the increasing adoption of IT and artificial intelligence, rising confidence in inflation control, and efforts to enhance logistics. Collaboration between the presidency and private sector leaders in addressing energy, logistics, crime, and the criminal justice system is yielding fruitful results.
Moreover, investment in renewable energy and new transmission lines could propel economic growth forward, with a potential knock-on effect on the country's economic development.