Skip to main content
Invest Now
012 012 5270
Copyright © Aluma Capital (Pty) Ltd. All rights reserved.
Aluma Capital (Pty) Ltd is a registered Financial Services Provider (FSP 46449) in terms of The Financial Advisory and Intermediary Services Act (37 of 2002)
Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
December 6, 2024

South African Economic Performance

GDP, Economic growth and Inflation for 2024Q3

South’s economy unexpectedly contracted by 0.3% in Q3 2024, with six out of ten sectors growing. The agricultural sector significantly declined by 28.8%. Positively, manufacturing and finance showed growth, contributing to overall resilience. However, consumer demand and elevated prices in the economy remain concerns, while expected growth for 2024 is estimated at just 0.7%. Addressing policy clarity and structural reforms could enhance business confidence and stimulate growth.

Out of ten sectors, six experienced growth, while general government, transport, storage, communication, and trade sectors faced contractions. The agricultural sector was the largest detractor, with a significant decline of 28.8% quarter-on-quarter, contributing 0.7 percentage points to the overall economic contraction. This downturn is unexpected, especially considering employment in agriculture rose from 896,000 in the second quarter to 935,000 in the third quarter.

On a positive note, manufacturing grew by 0.5%, bolstered by improved Purchasing Managers’ Index (PMI) figures and fewer electricity supply constraints, as evidenced by a 1.6% growth in the electricity sector. The finance sector, the largest contributor to GDP, grew by 1.3%, similar to the previous quarter’s 1.5% growth, adding 0.3 percentage points to help mitigate the slowdown caused by the agricultural decline.

However, the trade sector’s notable slowdown remains concerning. Consumer demand, reflected in this sector, contracted by 0.4% quarter-on-quarter and another 2.0% year-on-year, following a previous 2.0% decline. High inflation, elevated interest rates, and stagnant wages continue to pose challenges for consumers.

For 2024, overall growth is estimated at 0.7%, the same as in 2023, which is insufficient to significantly address South Africa’s high unemployment crisis. However, increased market optimism, reductions in load-shedding, and a 50-basis point cut in interest rates could positively influence economic activity for the remainder of 2024 and into 2025.

Key challenges persist for businesses, and the government must deliver on promises related to policy clarity and tangible progress on structural reforms announced earlier this year. By addressing these key issues, there is potential to enhance business confidence, which is essential for driving higher economic growth in the coming months—something South Africa urgently needs.

Back to News

More Coverage

A Watershed Moment: Global Ceasefire and Massive Oil Correction Offer Crucial Relief for the SA Economy

A sudden global shift has delivered much-needed relief for South Africa. Following a Middle East ceasefire, oil prices have dropped sharply and the Rand has strengthened—easing pressure on fuel costs and inflation. While earlier price spikes still weigh on the outlook, this combined correction offers a critical window for economic stability, improved consumer confidence, and renewed growth momentum.

The Great Fuel Buffer

South Africa finds itself balancing global energy shocks with decisive local action. As rising oil prices threaten to strain consumers and key industries, government intervention has softened the immediate impact—highlighting both the urgency of the moment and the need for smarter, more resilient fiscal tools to manage future volatility.

SARB opts for Strategic Resilience

The South African Reserve Bank has opted for a “hawkish hold,” maintaining the repo rate at 6.75% despite headline inflation hitting a milestone low of 3.0%. Governor Lesetja Kganyago emphasised that while the inflation target has been met, the MPC remains wary of a potential “energy tax” on the economy, driven by global oil prices surging above $100 per barrel. Consequently, the Bank has adopted a cautious, forward-looking stance, slightly lowering the 2026 GDP growth forecast to 1.1% to account for these external shocks and ensure long-term currency stability.

Navigating the Geopolitical Crosswinds

South Africa faces renewed inflation risks despite brief market relief, driven by rising fuel costs and import dependence. The SARB is likely to hold interest rates to protect price stability.

The Perfect Storm:

This morning, South Africans received what should have been a crowning achievement for the South African Reserve Bank (SARB). Data from Stats SA revealed that the Consumer Price Index (CPI) cooled to 3.0% in February, down from 3.5% in January. This lands the country perfectly on the SARB’s new, more ambitious inflation target.