On the supply side of the economy, various plans that have been set in motion to address supply-side constraints will need to be executed. Launched in 2020, Operation Vulindlela focuses on accelerating reform implementation within the electricity, rail, water, and telecommunication industries.13 Although some argue that these reforms are not ambitious enough14 and that momentum has been slow, there has been some progress. “This concrete and ongoing delivery of the action plan has boosted business confidence with credit rating agencies and banks stating Eskom’s performance recovery is a key contributor towards positive sentiments as far as South Africa’s GDP growth prospects of up to 2% are concerned,” said Dan Marokane, Group Chief Executive of Eskom. Mining has been the main driving force behind the history and development of Africa’s most advanced economy. Large-scale and profitable mining started with the discovery of a diamond on the banks of the Orange River in 1867 by Erasmus Jacobs and the subsequent discovery and exploitation of the Kimberley pipes a few years later. Gold rushes to Pilgrim’s Rest and Barberton were precursors to the biggest discovery of all, the Main Reef/Main Reef Leader on Gerhardus Oosthuizen’s farm Langlaagte, Portion C, in 1886, the Witwatersrand Gold Rush and the subsequent rapid development of the goldfield there, the biggest of them all.
No surprises for guessing the South African economic climate for 2024 is looking pretty rocky at first glance. Economists are predicting a sluggish 1% growth in 2024 as the South African economic climate battles both https://www.liberty.co.za/ global and domestic challenges. Unless otherwise indicated, references in this website to a ‘member firm’ or ‘member firms’ are references to member firms of KPMG International who are members in, or have other legal connections to, KPMG International, an English private company limited by guarantee. KPMG is the brand under which the member firms of KPMG International Limited (KPMG International) operate and provide professional services.
Despite recording the worst year of loadshedding1 on record sasol gas (so far) in 2023 (more than 6,700 hours of loadshedding were recorded in 2023,2 compared to about 3,700 in 2022),3 South Africa managed to avoid a technical recession. Real GDP growth stood at 0.6% last year.4 In the first half of 2023, businesses and households alike invested in self-generation and rooftop solar power, boosting investment spending, and aiding to bridge energy shortfalls. But household final consumption expenditure growth has been flat, given the high cost of living and the country’s energy crisis.
Household final consumption expenditure increased by 0.5%, with the highest growth rates reported for non-durable and semidurable goods. The main positive contributors to the increase were spending on food and non-alcoholic beverages housing, water, https://personal.nedbank.co.za/ electricity, gas and other fuels, recreation and culture and restaurants and hotels. Transport, storage and communication industry decreased, while decreased economic activities were also reported for land transport and transport support services. The trade, catering and accommodation industry decreased by 0.4%, with decreased economic activities reported for wholesale trade, motor trade and food and beverages. The IMF’s latest forecast underscores the pressing need for South Africa to accelerate reforms and address its long-standing economic challenges. While the road ahead is fraught with difficulties, opportunities for recovery remain—provided there is strong governance, sound policy execution, and collaborative efforts between the public and private sectors.
The IMF’s latest World Economic Outlook report stated that South Africa experienced a bleak output this year after the IMF slashed its growth outlook to 1% from 1.8% in January. South Africans, investors, and businesses will now look to 2025 and beyond, hoping for the fulfillment of promises that could steer the economy toward sustained growth. Despite the immediate challenges, the IMF has maintained its projections for 2025 and 2026 at 1.5% and 1.6%, respectively, with a gradual recovery expected over the medium term. Stats SA’s data for the third quarter of 2024 showed a surprising 0.3% contraction in GDP, with the agriculture, forestry, and fishing sectors taking a particularly hard hit, shrinking by a staggering 28.8%.
