AFTER a revised zero growth (0.0%) in 1Q 2024, the better news is that real GDP in South Africa grew by a modest 0.4% in the second quarter of 2024, says NWU Business School economist Prof Raymond Parsons.
“It could represent a turning point in SA’s business cycle, as our 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),” he comments.
“They also confirm the extensive damage to SA’s economic growth that Eskom’s previous loadshedding, in particular, did earlier in terms of widespread disruption, heavy costs and debilitating economic uncertainty. As loadshedding has recently receded, so business and consumer confidence have recovered to better levels.
“The growth figures for 2Q 2024 GDP show that renewed energy security since March 2024 has helped the country’s growth performance to gradually cross an important threshold. In 2Q 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 2Q 2024 growth scenario. Total GFCF, especially, is a major driver of future economic growth. 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 SA plays its cards well from now on, it becomes possible to visualise SA’s real GDP growth broadly at 1% in 2024, improving to about 2% in 2025, and perhaps even reaching 3% by 2026,” Prof Parsons concludes.
