Government urged to push structural reforms as South Africa's GDP grows 0.6%
After a marginal contraction of 0.1% in the third quarter of 2024, South Africa's economy showed resilience with a 0.6% GDP expansion in the final quarter of the year.
Growth was primarily fueled by agriculture, finance, and trade on the production side, while household spending remained a key driver of demand. Despite a challenging economic environment, the country closed the year with an annual GDP increase of 0.6% compared to 2023, signalling cautious optimism for the year ahead.
Commenting on the latest GDP figures, North-West University Business School economist, Prof. Raymond Parsons, highlighted that while the fourth-quarter recovery is a positive development, it underscores the need for sustained, inclusive economic growth.
He noted that the Government of National Unity (GNU) has rightly prioritised higher growth and stronger job creation, as South Africa's long-standing challenge remains its persistently low growth rate. To unlock the country's full economic potential, Parsons emphasised the importance of maintaining a conducive environment for investment and long-term expansion.
The modest 0.6% GDP growth in Q4 2024 highlights the tough budgetary choices facing the GNU, he said.
"The GNU's Medium Term Development Strategy itself has set an overall growth target of 3%, which is about the minimum needed for SA to begin to make a big dent in its unemployment levels and help to alleviate poverty.
"The GNU Budget on 12 March must therefore show a policy 'mix' that carefully calibrates fiscal consolidation, avoids a negative 'tax-and-spend' fiscal cycle, and supports growth-enhancing measures.
"Accelerated growth-friendly structural reforms, especially in infrastructure development, need to be urgently implemented to lift SA's medium-term growth to 3%, say by 2027."
Weak investment, at 15% of GDP, hinders South Africa's recovery, with household spending driving growth, Parsons added.
"Household spending has done most of the 'heavy lifting' in SA's economic upturn so far. Higher sustainable growth also helps to create the economic buffers and resilience needed to mitigate any external shocks caused by elevated global uncertainty."
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