The fourth quarter (4Q) gross domestic product (GDP) growth figures that were released on 4 March are positive, but the mild recovery in the GDP in the 4Q of 2024 again confirms that the Government of National Unity (GNU) is right to have set much higher inclusive growth and stronger job creation as South Africa’s key overarching economic priorities.

In commenting on the growth figures, Prof Raymond Parsons, economist from the North-West University (NWU) Business School, says the latest data again emphasises that growth in South Africa has been too low for too long and that the situation must be remedied by maintaining the right economic environment for investment and growth.

“With the figures coming on the eve of the presentation of the postponed Budget, the modest 4Q 2024 GDP growth of 0,6% must therefore also inform the tough choices facing the GNU in finalising an amended Budget. The GNU’s Medium Term Development Strategy itself has set an overall growth target of 3%, which is about the minimum needed for South Africa to begin to make a big dent in its unemployment levels and help to alleviate poverty.”

Prof Parsons says the GNU Budget on 12 March must therefore show a policy mix that carefully calibrates fiscal consolidation, avoids a negative tax-and-spend fiscal cycle, and supports growth-enhancing measures.

“Accelerated growth-friendly structural reforms, especially in infrastructure development, need to be implemented urgently to lift South Africa’s medium-term growth to 3%, say by 2027.”

According to Prof Parsons, fixed-capital formation remains a weak link in South Africa’s slow and uneven economic recovery, as it is still only at about 15% of GDP instead of the NDP’s target of 25% to 30%.

“Household spending has done most of the heavy lifting in South Africa’s economic upturn so far. Higher sustainable growth also helps to create the economic buffers and resilience needed to mitigate any external shocks caused by elevated global uncertainty,” he concludes.