“After the revised zero growth (0,0%) in the first quarter of 2024, the better news is that real gross domestic product (GDP) in South Africa grew by a modest 0,4% in the second quarter of 2024.”
In commenting on the second-quarter GDP figures that Statistics SA released on 3 September, Prof Raymond Parsons, economist from the NWU Business School, says it could represent a turning point in South Africa’s business cycle, as the growth performance has clearly been too low for too long.
“The weak growth performance confirms the top priority now given to inclusive job-rich growth by the Government of National Unity (GNU). They also confirm the extensive damage to South Africa’s economic growth that Eskom’s previous load-shedding, in particular, did earlier in terms of widespread disruption, heavy costs and debilitating economic uncertainty.”
Prof Parsons says as load-shedding has recently receded, so business and consumer confidence have recovered to better levels.
The GDP growth figures for the second quarter of 2024 show that renewed energy security since March 2024 has helped the country’s growth performance to gradually cross an important threshold.
“In Quarter 2 of 2024, growth seems to have been largely dependent on much stronger household spending. The economy is not, however, on cruise control. Both gross fixed capital formation (GFCF) and exports remain weak links in the second quarter 2024 growth scenario.”
Prof Parsons explains that total GFCF, especially, is a major driver of future economic growth. He says complacency must therefore be avoided, as salient risks to the growth outlook linger, and there are still daunting socioeconomic challenges to be tackled.
“Key growth-friendly reforms, policies and projects therefore still need to be expedited by the GNU in collaboration with the private sector to ensure putting the economy on a much higher and sustainable growth path. If South Africa plays its cards well from now on, it becomes possible to visualise South Africa’s real GDP growth broadly at 1% in 2024, improving to about 2% in 2025, and perhaps even reaching 3% by 2026,” he concludes.
