There’s still optimism that economic growth this year could nearly double last year’s figure, Investec chief economist Annabel Bishop said at the S&P Global Ratings SA event held in Sandton on Wednesday.
That’s despite a disappointing GDP outcome for the first quarter, with growth slowing to just 0.1% as contractions in manufacturing and mining offset a strong rebound in agriculture.
Bishop, who participated in a panel on macroeconomics, expressed this optimism even as global uncertainty has caused a lot of “flip-flopping on economic forecasts this year”.
“At the start of the year, we saw 1.8% — even at the end of last year, people talking about the possibility of economic growth approaching 3% this year,” Bishop said.
“Those very, very harsh tariffs that we saw at one point really did create concern,” adding that it “impacted manufacturers and investors alike”.
“We saw a huge hit to global financial markets, drop in equities and risk assets all around... The rand weakened substantially.”
Resilience
Panellists agreed that while SA’s economy shows resilience, persistent structural weaknesses and infrastructure backlogs threaten its long-term potential.
“I think there’s great concern [on the domestic front]. We haven’t seen much progress yet, as perhaps had been hoped, in terms of some infrastructure areas.
“Others, of course, we have seen more, and of course, looking at electricity, while we have bouts of load-shedding, we don’t have that harsh environment we had in 2023 so there’s certainly been positive developments in optimism. But of course, still waiting for Transnet to continue its repair.”
Transnet has been slow to undertake turnaround efforts to tackle operational and financial challenges, including infrastructure rebuilding and the development of private sector partnerships.
The entity recently secured a further R51bn in government guarantees, which it said would enable it to refinance maturing debt and access cash as well as improve and reform its operations.
“The core of this [slow growth] is there’s been very little investment,” Absa’s head of macro and fixed income research, Jeff Gable, another panellist, warned.
“The narrative that we were building from last year, [with] load-shedding gone, [and] the GNU providing a new political direction, was one that we would finally start to see positive investment decisions taken. And now there’s a question mark over that, so that becomes a little bit concerning,” he said.
Despite risks, Investec’s forecast now stands at 1.3% for 2024, which Bishop said “might drop to 1.2 or 1.1,” but she remains positive overall.
“To be honest, we are still optimistic that this year we’ll see almost double of what economic growth came out last year.”
In his keynote address, president of S&P Global Ratings Yann Le Pallec said that while US tariffs and their direct and indirect impact have had “some limiting effect” on S&P’s growth expectations, the agency still forecast a rebound in GDP growth from 2024 levels to average 1.5% over the 2026—2028 period.
“Companies focused on their domestic markets have generally proven more resilient than commodity producers during periods of high global uncertainty. Turning to financing for development, our experience at S&P Global Ratings shows that there are many avenues for nations to finance critical projects.”
On whether it’s important for the US to attend the Group of 20 (G20) in November, Gable insisted that “it has to matter”.
“If ... the US is absent, what is going to be paragraphs one, two and three of every global story?” he asked.
“It’s going to be nothing about solidarity and sustainability and inequality. It’s going to be nothing about all the things that a huge number of working groups are engaged in every single week, all year this year,” he said.
“[We’ve] got to make sure that the headline from this G20 isn’t the US boycotting… Hopefully, on the back channels, there’s a huge amount of work ensuring that the US participates and participates at the very highest level.”
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