Although the government has laid out plans to address these issues, tangible progress is expected to take years. In the 2024 national elections, the African National Congress, in power since 1994, received only 40.2% of votes.1 Unable to secure a parliamentary majority, it formed a coalition government with the centrist and pro-market Democratic Alliance—its main opposition—as well as other https://www.momentum.co.za/ small parties. Given some of the constraints under discussion, but also stemming from various uncertainties such as heightened geopolitical tensions in the Middle East, climate change risks, still-tight financing conditions, and South Africa’s upcoming elections on May 29, there are notable downside risks to growth.
The South African government must act now if it wants to use renewable energy to drive future economic growth and stay ahead in the global shift to clean energy. These two events combined caused a general slowdown in non-renewable and renewable energy use, and in economic growth. A modernized mining rights system, expected this year, aims to unlock investment in exploration and critical minerals, strengthening South Africa’s position in the global commodities market. With GDP growth struggling to surpass 1.5% in recent years, achieving the government’s 3% target will be a significant challenge. While infrastructure spending is a key strategy, Roodt cautioned that it alone may not be enough to drive the necessary economic expansion. We could see economic growth well below 1.5%, and that will have serious consequences,” he tells FORBES AFRICA.
NIGERIAN CONTENT DEVELOPMENT AND MONITORING BOARD URGED TO IMPLEMENT THE OIL AND GAS DEVELOPMENT ACT
South Sudan is projected to have the most growth, with a staggering 34.4% surge, while Rwanda, Senegal, and Uganda are each set to expand by over 7%. The AfDB’s forecast aligns with World Bank projections of robust growth of around 4.2% in sub-Saharan Africa. In its report, the bank also noted that 12 of the 20 fastest-growing economies in 2025 will be in Africa. The coalition government has made strides in implementing reforms to enhance economic performance.
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- Unexpectedly, real GDP growth fell by 0.3% in the third quarter of 2024, which also lowers the expected growth outcomes for 2024 to less than 1%.
- On the supply side of the economy, various plans that have been set in motion to address supply-side constraints will need to be executed.
- While challenges persist, the collaborative efforts of the government, private sector, and international investors could mark the start of a sustained recovery.
- However, the transport, storage, and communication sector decreased by 2.2%, detracting 0.2 percentage points, mainly due to lower land transport and support services activities.
Partnerships between the public and private sectors are unlocking billions of rands in infrastructure development, particularly in transport and telecommunications. South Africa’s economic outlook for 2025 appears promising, with gains in energy stability, structural reforms, and monetary policy expected to drive growth. While challenges persist, the collaborative efforts of the government, private sector, and international investors could mark the start of a sustained recovery.
South Africa economic outlook, November 2024
South Africa’s economy has faced a major setback, with Q3 GDP figures showing a surprising decline that has led economists to revise their growth projections for 2024. Once optimistic about the country’s potential to cross the 1% growth mark, many experts are now forecasting a more modest performance. The latest data has placed full-year projections at 0.8%, down from earlier expectations, as key sectors continue to struggle. President Cyril Ramaphosa and the GNU have set an ambitious goal of achieving 3% GDP growth, but experts say this will require precise execution of reforms, increased investment, and strong public-private sector collaboration. On the supply side of the economy, various plans that have been set in motion to address supply-side constraints will need to be executed. Launched in 2020, Operation Vulindlela focuses on accelerating reform implementation within the electricity, rail, water, and telecommunication industries.13 Although some argue that these reforms are not ambitious enough14 and that momentum has been slow, there has been some progress.
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According to our model, this sharp increase was enough to have an impact on economic growth over the short term but not over the long term. We set out https://personal.nedbank.co.za/ to discover whether renewable energy in South Africa, such as wind or solar power, supports sustainable economic growth. We also wanted to find out if renewables can replace non-renewable energy as a source and enabler of economic growth. With GDP growth struggling to surpass 1.5% in recent years, achieving the 3% target will require more than infrastructure spending. Structural challenges — from inefficiencies in SOEs to regulatory red tape — continue to hamper investor confidence.
Services
Logistics issues, which have persisted for years, continue to hurt the economy’s recovery, despite some positive changes, like lower inflation and interest rates. The manufacturing sector, contributing 1.1%, saw growth in six out of ten divisions, notably in motor vehicles, parts and accessories, food and beverages, and basic metals. The electricity, gas, and water sectors grew by 3.1%, adding another 0.1 percentage points, driven by increases in production and consumption. However, the transport, storage, and communication sector decreased by 2.2%, detracting 0.2 percentage points, mainly due to lower land transport and support services activities. The agriculture, forestry, and fishing sector also declined by 2.1%, contributing negatively by 0.1 percentage points. Despite improvements in managing power outages, the lasting effects of 2023’s load shedding crisis remain evident.
South Africa’s 2025 Economic Outlook
South Africa’s 2024 GDP outlook has been revised downward due to weaker-than-expected performance in Q3, particularly in the agriculture and manufacturing sectors. While short-term recovery seems unlikely, economists remain cautiously optimistic about 2025, expecting a recovery spurred by structural reforms, consumer demand, and an improved global economic environment. Final consumption expenditure by the government increased by 1.0%, adding 0.2 percentage points, driven by higher purchases of goods and services and employee compensation. However, gross fixed capital formation decreased by 1.4%, subtracting 0.2 percentage points from GDP growth. The decline was primarily due to reductions in other assets, construction works, and machinery, and other equipment.
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These have held the sector back from making a bigger contribution to economic growth. This is because South African energy regulators have not adopted strong enough measures for renewable energy to enable long-term growth. They have not funded the mass rollout of renewable energy, or connected renewables to the national grid. We found that renewables can only sustain growth over six to 12 month cycles whereas policymakers work towards longer cycles such as the 2030 and 2050 sustainable development goals. After 2000, there was a very sharp increase of almost 25% in the use of renewable energy sasol stock throughout the decade.