South Africa GDP Returns to Growth But at Slower Than Expected Pace
TLDR
- South Africa's economic growth increased in Q2 2024, driven by higher consumer spending and improved power availability.
- GDP expanded by 0.4% in seasonally-adjusted terms, slightly below the 0.5% forecast, but showing improvement from the previous quarter.
- Improvement was noted in seven out of 10 sectors, benefiting from an uninterrupted power supply, although challenges like port bottlenecks and weak global demand persist.
South Africa’s economic growth picked up in the second quarter of 2024, driven by higher consumer spending and improved power availability. However, the country’s GDP expanded by 0.4% in quarter-on-quarter seasonally-adjusted terms, slightly below the 0.5% growth forecast by economists.
This was an improvement over the first quarter’s flat output but was dampened by declines in the agriculture, mining, and transport sectors. Statistician-General Risenga Maluleke noted that it was too early to attribute the improved performance to the coalition government formed after the May elections, as President Cyril Ramaphosa was only sworn in for a second term in mid-June.
Seven of the 10 sectors tracked by Statistics South Africa registered growth, supported by an uninterrupted power supply, a first in years. However, persistent bottlenecks in ports and the freight rail network, along with weak global demand, continue to weigh on the economy.
Key Takeaways
South Africa’s modest GDP growth in Q2 reflects improvements in power availability but also highlights ongoing challenges in key sectors. While the absence of power cuts contributed positively, bottlenecks in logistics and weak global demand continue to hinder stronger economic performance. Looking ahead, growth may accelerate in the fourth quarter, buoyed by new government pension policy reforms that could boost consumer spending and anticipated interest rate cuts by the central bank. The Bureau for Economic Research (BER) forecasts 2.2% growth in 2025, contingent on the success of reforms aimed at enhancing South Africa’s growth potential. Despite recent gains, the economy remains vulnerable to internal inefficiencies and external market conditions.
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