South Africa’s economy experienced a modest recovery in the fourth quarter of the previous year, buoyed by a rebound in agricultural production following a contraction in the preceding quarter.
However, the 0.6% growth in gross domestic product (GDP) on a seasonally adjusted, quarter-on-quarter basis fell short of the 0.9% forecasted by economists, as only three out of the ten sectors monitored by Statistics South Africa reported growth.
“Although the growth is a positive sign, the economic recovery in South Africa remains precarious, with varied performances across different sectors,” remarked Shaun Murison, a senior market analyst at IG.
The agricultural sector saw a significant increase of 17.2% in the fourth quarter, driven by heightened activity in field crops and livestock products.
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“Agriculture is often unpredictable, significantly affected by increasingly erratic and severe weather patterns,” noted Nicky Weimar, chief economist at Nedbank.
In the last quarter of 2024, the trade sector grew by 1.4%, while finance expanded by 1.1%. Conversely, manufacturing contracted by 0.6%, mining decreased by 0.2%, and construction declined by 0.4%.
In the fourth quarter, GDP experienced a year-on-year increase of 0.9%, while the overall growth for 2024 was recorded at 0.6%.
Bokang Vumbukani-Lepolesa, the chief director for national accounts at Stats SA, indicated that the withdrawals associated with last year’s “two-pot” pension reform contributed to an increase in household spending towards the year’s end.
Economists anticipate a modest acceleration of the economy in 2025, driven by enhanced consumer confidence and a rebound in real household incomes, attributed to low inflation and decreasing interest rates.
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However, despite the improved availability of power over the past year and the hopeful outlook that the ruling coalition government will implement growth-promoting reforms, the business operating environment is expected to remain difficult for many enterprises.
The statistics agency has revised its estimate of the contraction in the third quarter to 0.1%.
