The economic outlook for South Africa in 2024 is uncertain, and there are many different opinions, projections, and assumptions, with an equal positive and negative outlook across the elements reviewed for the economic outlook.
According to the African Development Bank, the economy is projected to grow by 1.5% in 2024, supported by growth in trade, tourism, mining, and manufacturing. Inflation is projected to decline to 4.5% in 2024 on account of reduced fuel and food prices, subject to evolving global dynamics. The fiscal deficit is projected to increase to 6.7% of GDP in 2024 due to fiscal consolidation, including higher tax revenue. The current account deficit is projected to widen to 2.4% of GDP in 2024 due to an anticipated drop in commodity prices.
According to PwC South Africa, the economic growth slowed last year to an estimated 2.0% and is expected to continue lower in 2024 to just 1.7%. Growth was below potential in 2023 due to, mainly, ongoing load-shedding and is expected to continue to underperform in 2024 due to the expected regular implementation of rolling blackouts.
Inflation is projected to average 5.4% this year from a mean of 6.8% in 2023. Interest rate hikes are also nearing an end, with a possibility of the repo rate starting to decline from the fourth quarter of 2024.
The SA budget review 2024 is a document that provides an overview of the government’s fiscal policy and performance for the 2024/25 financial year, as well as the medium-term projections for the next three years. The budget review 2024 is usually presented by the Minister of Finance in February, along with the main budget speech and the appropriation bill. The budget review 2024 is based on the macroeconomic and fiscal framework that was outlined in the Medium-Term Budget Policy Statement (MTBPS) in September 2023.
According to the report, some of the main highlights of the budget review 2024 are:
- The economy is expected to grow by 1.7% in 2024, after a modest recovery of 1.5% in 2023. The growth outlook is constrained by the persistent electricity supply challenges, weak business confidence, rising interest rates, and subdued global demand.
- The revenue is projected to increase by 6.2% in 2024, reaching R2.01 trillion, or 26.9% of GDP. The revenue growth is supported by the recovery in economic activity, higher commodity prices, improved tax compliance, and some tax policy measures.
- The expenditure is projected to increase by 5.1% in 2024, reaching R2.14 trillion, or 28.6% of GDP. The expenditure growth is moderated by the fiscal consolidation efforts, the wage bill restraint, the reprioritisation of spending, and the reduction of wasteful and inefficient expenditure.
- The budget deficit is projected to narrow from 4% of GDP in 2023 to 3.8% of GDP in 2024, and further to 3.2% of GDP in 2026. The deficit reduction is achieved by maintaining a primary surplus, where revenue exceeds non-interest expenditure, from 2023 onwards.
- The debt is projected to stabilise at 71.4% of GDP in 2026, after peaking at 72.1% of GDP in 2025. The debt stabilisation is achieved by maintaining a prudent borrowing strategy, reducing the borrowing requirement, and lowering the cost of debt.
Some other resources have different forecasts and scenarios for the economy of South Africa in 2024, such as Investec, which expects a lower growth rate of 1.1% in 2024. The report cited the risks of credit rating downgrades, higher interest rates, inflationary pressures, and social unrest as the main factors that could hamper the economic recovery.
Read the rest of the article, here: Automobil January 2024 (publuu.com)
Credit: Linda Rossouw is the Founder and Managing Director of LaRoss Consulting. She is highly qualified and experienced in finance and other business matters. She is passionate about finding solutions and helping people and businesses to transform.
