SA’s economy is expected to have rebounded modestly in the final quarter of 2024 after plummeting in the third quarter, economists polled by Business Day said.
Stats SA will release the official fourth-quarter GDP data on Tuesday.
Lisette IJssel de Schepper, senior economist at the Bureau for Economic Research, noted that “the potential revision to the third quarter data makes it more difficult than usual to estimate by how much”.
This uncertainty is reflected in economists’ forecasts for GDP growth in the fourth quarter, which range from 0.5% to 1.2%, with most clustering at 0.6%-0.9%.
“The overall fourth quarter GDP data is likely to be better than the disappointing minus 0.3% experienced in the third quarter,” said North-West University’s Prof Raymond Parsons. “If fourth-quarter GDP growth reaches about 0.6%, then growth for 2024 as a whole is likely to have been around 0.7%.”
Mining and manufacturing were hit hard — they should unfortunately pull GDP down again
— Maarten Ackerman, Citadel chief economist
Nedbank’s economists expect quarterly growth of 0.5%, describing the economy’s performance as “modest gains,” led by the services sector.
The retail and financial services sectors stood out in quarter four, said independent economist Elize Kruger, who expects 0.9% growth for the quarter.
This strength was driven by higher nominal take-home pay, lower inflation, improved household and corporate confidence and R43bn in two-pot retirement withdrawals since September 2024, Kruger said.
“Retail sales looked pretty good so that should make a strong positive contribution,” said Maarten Ackerman, chief economist at Citadel, who expects growth of about 1% for the quarter.
Kruger noted that confidence levels among households and businesses improved during the quarter, further encouraging spending, adding that consumers also benefited from a cumulative 75 basis points reduction in interest rates in 2024, with two of those cuts implemented during the fourth quarter.
She expects full-year growth for 2024 to be 0.6%-0.7% (similar to 2023’s 0.7%) assuming no revision to the third quarter data.
“This remains a disappointing outcome, notably below earlier expectations and notably below population growth, suggesting that GDP per capita will continue to slide, leaving all South Africans poorer in relative terms,” she said.
The picture is darker for the primary and secondary sectors, which continued to struggle despite 280 days of stable electricity supply in 2024.
“Mining and manufacturing were hit hard — they should unfortunately pull GDP down again,” Ackerman said.
Nedbank’s economists cited high operating costs, logistical inefficiencies, water insecurity, rising tariffs and port congestion as structural barriers still weighing heavily on production.
However, all is not lost on the logistics front, as Lara Hodes, economist at Investec, expects fourth-quarter GDP growth of 1.2%, citing “a moderate improvement on the logistics front” as one of the contributing factors.
After a 28.8% plunge in the third quarter — the worst quarterly decline for agriculture since 1970 — the sector is expected to make a positive contribution to GDP in the final quarter of 2024, largely due to a base effect, according to Ackerman.
This view is broadly shared by Nedbank’s economists, who expect agriculture to have expanded 0.4% quarter on quarter in the fourth quarter.
However, questions remain over the accuracy of some of the third-quarter’s data.
IJssel de Schepper earlier noted: “Credible research from the Bureau for Food and Agricultural Policy has since shown that the 2024 quarter one to quarter three contraction in agricultural production is a severe overstatement of what actually transpired in the sector and indications are that a significant revision will be made to the historic agriculture data.”
Oxford Economics’ Jee-A van der Linde said it could be assumed revisions to agriculture could be made after the outsize decline in the third quarter. Based on that assumption, it was estimated that quarterly real GDP growth averaged 0.4% in the second half of 2024 up from the 0.2% recorded in the first half.
Even with a modest rebound in the fourth quarter, the outlook within agriculture is uneven, Nedbank cautioned.
“There were some positive developments in livestock, while horticulture suffered production declines,” the bank said.
It noted that while 2024 summer and winter crops were lower than the previous season, the outlook for the 2024-25 season is more optimistic.
The latest crop estimates committee figures project total summer grain and oilseed production at 17.2-million tonnes, 11% higher than the 2023-24 season.
Research strongly suggests that, if indeed growth-friendly reforms are accelerated by the GNU, a 3% rate of growth could be achieved by 2027. If not, growth may only reach a more modest 2% by then.
— Prof Raymond Parsons, economist and policy adviser
Economists expect modest acceleration in 2025, but nowhere near the level needed to cut unemployment and poverty.
Parsons forecasts 1.8% GDP growth in 2025, while Van der Linde sees 1.5% and Nedbank projects 1.4%.
“The main boost will come from domestic demand, supported by firmer consumer confidence, a recovery in real household incomes driven by lower inflation and lower debt service costs as interest rates ease,” Nedbank’s economists said.
However, the risk factors remain. “Despite minor progress on the structural front, operating conditions remain challenging and production costs high,” the economists said.
They warn that the heightened threat of a global trade war and the potential collapse of the Africa Growth and Opportunity Act — a trade deal with the US — pose downside risks.
Several economists see the upcoming GNU budget on March 12 as a critical policy moment.
“The amended budget must be strongly aligned with policies that support the GNU’s medium-term development strategy’s overall 3% job-rich growth target and related goals,” said Parsons.
“Getting the right fiscal policy ‘mix’ is daunting but essential.
"Looking ahead, research strongly suggests that, if indeed growth-friendly reforms are accelerated by the GNU, a 3% rate of growth could be achieved by 2027. If not, growth may only reach a more modest 2% by then," Parsons said.
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