South Africa’s Economy Returns to Growth in Fourth Quarter
TLDR
- South Africa’s economy expanded by 0.6% in the fourth quarter of 2024, following a slight contraction of 0.1% in the previous quarter
- Agriculture, which had plunged nearly 29% in the third quarter, played a pivotal role in the recovery
- For the year, South Africa’s GDP grew by 0.6%, with a 0.9% year-on-year increase in the final quarter
South Africa’s economy expanded by 0.6% in the fourth quarter of 2024, following a slight contraction of 0.1% in the previous quarter, according to Statistics South Africa. The growth was slower than economists' forecast of 0.9%, with only three out of ten industries showing growth.
Agriculture, which had plunged nearly 29% in the third quarter, played a pivotal role in the recovery, rebounding by 17.2% in the fourth quarter. This helped lift overall GDP, although sectors like mining and manufacturing contracted by 0.2% and 0.6%, respectively. For the year, South Africa’s GDP grew by 0.6%, with a 0.9% year-on-year increase in the final quarter. Consumer spending also showed positive signs, growing 1.0% quarter-on-quarter and 2.3% year-on-year, the highest since early 2022.
However, government consumption and investment fell by 0.6% and 2.7%, respectively. Despite challenges like power supply issues and declining government spending, Capital Economics has projected a growth rate of 2.3% for 2025, citing improving conditions in electricity supply, logistics, and inflation.
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Points clés à retenir
While South Africa’s economy rebounded modestly in the fourth quarter, driven by agriculture and consumer spending, sectors like mining and manufacturing lagged behind. This highlights the uneven recovery across the economy, with consumer confidence bolstering growth despite declines in government spending and investment. The outlook for 2025 remains cautiously optimistic, with Capital Economics predicting growth of 2.3%. Factors like improved electricity supply, easing logistical challenges, and low inflation could support economic expansion. However, ongoing risks such as global trade tensions and domestic policy changes could impact South Africa’s economic trajectory. Continued recovery will depend on consistent improvements in key sectors like energy and manufacturing.
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