Economic growth in South Africa is expected to have ticked up slightly by 0.5% in the three months to end September.
This comes as Statistics South Africa (Stats SA) will tomorrow publish the gross domestic product (GDP) figures for the third quarter of 2024 after the economy grew by 0.4% in the second quarter.
In the second quarter, seven industries recorded positive growth, with the finance industry increasing by 1.3% followed by the trade industry and the manufacturing industry, which increased by 1.2% and 1.1%, respectively.
Economists now expect that the persistent absence of load shedding and other logistical advances created a more favourable producer environment during the third quarter.
Eskom has suspended load shedding for more than eight months (247 consecutive days) since 26 March, due to ongoing structural improvements in the coal-fired fleet, and the energy availability factor (EAF) averaged 65% over the quarter.
These improvements are contributing to economic growth and energy security.
Nedbank economist Crystal Huntley said these improvements were accompanied by some, albeit modest, progress on the logistical front, and high-frequency statistics reflected a slight uptick in economic activity over the third quarter.
Huntley said the improvement reflected better operating conditions and firmer domestic demand brought about by falling inflation.
“While these failed to lift growth significantly, given the broader context of generally subdued global and domestic demand and lower commodity prices, it was enough to provide some support to production. Consequently, mining, manufacturing and construction managed to increase output modestly,” she said.
“Despite mixed performances in the third quarter, we believe the worst of the downturn is probably behind us. We expect continued growth in the final quarter and some acceleration in 2025.
“Despite progress on the structural front, operating conditions remain challenging, and production costs are high. These factors will continue to weigh on producers and exporters. All told, we still expect growth of 1% in 2024 and 1.7% in 2025.”
This Nedbank’s growth forecast is in line with expectations from other organisations on the back of improving prospects for the economy due to better energy supply supporting a marginal upward revision to medium-term growth.
According to the International Monetary Fund (IMF), South Africa’s economy is expected to grow by 1.1% in 2024 and 1.5% in 2025, while the National Treasury is projecting growth of 1.1% in 2024 and 1.7% in 2025.
However, the IMF said risks were tilted to the downside, including from a further deepening of geoeconomic fragmentation, a deeper slowdown in key trading partners or an escalation of ongoing conflicts.
The IMF staff’s preliminary findings also highlighted that the Government of National Unity (GNU), in place since June 2024, represented an opportunity to put South Africa’s economy on a path toward higher and more inclusive growth
Investec chief economist, Annabel Bishop, was quite optimistic that economic growth will accelerate by 0.7% in the fourth quarter, spurred on by spending from pension savings withdrawals under the Two-Pot retirement system, along with debt reduction.
“SARS had expected collections to come out at about R5bn on taxation from the withdrawals under the two-pot system, but this is now expected to be more than double this, as demand for the funds has been strong,” Bishop said.
“The IMF has not seen a divergence in its previous recommendations for SA, updating them to include current and recent developments, but still shows a weak outlook of 1.8% by 2030, while Investec expects growth to exceed 3.0% by then.”
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