Macro-economic outlook: 2024 growth likely double that of 2023

South Africa’s economic growth outlook for 2024, at 1.0% y/y, is stronger than 2023’s likely 0.5% y/y outcome, with 2024 expected to see the start of an interest rate cutting cycle, as well as lower inflation on average, and improvements to infrastructure. 

Economic growth will be lifted by a reduction, to planned eventual elimination, of congestion at the ports, although electricity supply is not expected to fully, and consistently, meet demand this year, and higher stages of load shedding are likely.

That is, load shedding is likely to persist through 2024, at risk of worsening from stage 3/4 as insufficient capacity comes online, but 2025 should see more capacity from private sector generation, with further build-up over subsequent years.  

Global economic growth is expected to provide some support to the SA economy, with the OECD highlighting the likelihood of only a mild slowdown in growth in 2024, to 2.7% y/y (versus 2.9% y/y in 2023) and so not a recession and lifting to 3.0% y/y in 2025. 

For the US, the OECD forecasts growth at 1.5% y/y this year (after 2023’s likely outcome of 2.4% y/y), lower on the effects of prior monetary tightening but monetary policy is expected to begin easing in 2024. In 2025 the OECD sees growth lift to 1.7% y/y.

“In the euro area, which had been relatively hard hit by Russia’s war of aggression against Ukraine and the energy price shock, GDP growth is projected at 0.6% in 2023, before rising to 0.9% in 2024 and 1.5% in 2025.”

“China is expected to grow at a 5.2% rate this year, before growth drops to 4.7% in 2024 and 4.2% in 2025 on the back of ongoing stresses in the real estate sector and continued high household saving rates.”

Financial markets’ appetite for risk taking increased into the end of 2023, and the rand strengthened to R18.30/USD, with the JSE gaining close to 12% from early November, but both have since weakened somewhat on market jitters this year to date. 

Domestically sentiment concerns also centre around the nature of the coalition government after the national elections, likely in Q2.24, which is also dulling business confidence, while uncertainties over the global environment persist, adding to volatility. Warren Berriman

Managing Director - Alexander Beard RSA (Pty) Ltd.