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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
March 4, 2025

South African Economic Performance

GDP, Economic Growth and Inflation

2024 Q4

The South African economy showed resilience with a 0.6% growth in the fourth quarter of 2024, despite challenges. Key sectors like Agriculture and Finance thrived, and improved consumer demand signals optimism for 2025. With continued market confidence and government reforms, there is potential for significant economic advancement ahead.

The South African economy grew by 0.6% in the fourth quarter of 2024, slightly below market expectations of 1.0%. This modest growth comes despite positive economic indicators, interest rate reductions, and improved confidence levels during this period. Remarkably, electricity supply constraints did not impede performance in the last quarter of 2024.

Among the ten sectors, five showed annual growth. Notably, the Agricultural and Finance sectors increased by 3.7% and 4.1%, respectively. However, the Transport and Construction sectors contracted by 5.1% and 2.2%.

On a positive note, manufacturing saw a quarterly growth of 0.2%, supported by favorable market sentiment reflected in the Purchasing Managers’ Index (PMI) and reduced electricity supply issues, marked by a 5.7% growth in the electricity sector. The finance sector, the largest contributor to GDP, grew by 1.1%, similar to the previous quarter’s increase of 1.2%, contributing 0.3 percentage points to the overall growth for the fourth quarter.
The trade sector also saw improvement; after contracting by 2.2% quarter-on-quarter in the third quarter of 2024, it notably expanded by 2.0% in the last quarter. Increased consumer demand following withdrawals from the “Two-Pot” system, Black Friday sales in late November, and interest rate cuts in September and November contributed to this uptick.

Overall, South Africa’s economic growth for 2024 is estimated at 0.6%, a slight decrease from 0.7% in 2023, which remains inadequate to address the high unemployment crisis. However, with increased market optimism heading into 2025, less frequent load-shedding, and a 50-basis point interest rate cut in January 2025, there is potential for improved economic activity.

Challenges persist for businesses, and it is crucial for the government to deliver policy clarity and concrete progress on previously announced structural reforms. Diplomatic tensions between Pretoria and Washington, the suspension of U.S. aid to South Africa, and potential impacts on the AGOA agreement threaten South African businesses exporting to the U.S. Addressing these critical issues is essential to boost business confidence, which is necessary for driving significant economic growth in the coming months—a need that South Africa cannot overlook.

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More Coverage

Mining Production and Sales

August 2025
In August 2025, mining activity in South Africa declined by 0.2% year-on-year, following a 5.1% increase in July.

Manufacturing Production

August 2025
In August, South Africa’s manufacturing output further declined by 1.5%, following a 1.3% decrease in July. This downturn was significantly below market expectations, which had forecasted a 0.3% increase for August. The Purchasing Managers’ Index (PMI) also fell by 1.4 points, from 50.8 in July to 49.5 in August 2025, indicating a less favourable business climate anticipated by manufacturers for the month.

Reviving South Africa’s Economy

A Balanced Path to Growth, Jobs, and Prosperity
South Africa faces significant economic challenges that threaten the nation’s stability and future prosperity. Over the past decade, sluggish growth, high unemployment—particularly among the youth—and infrastructure decay have become critical issues. These problems are compounded by inconsistent policies, energy shortages, and a prevailing uncertainty in the investment climate. The African National Congress (ANC) has recognised this urgency, unveiling a ten-point plan aimed at revitalising the economy. While this approach shows a concerted effort to address systemic issues, a complementary set of reforms proposed in the Alternative Economic Blueprint offers a promising pathway toward sustainable growth, job creation, and economic freedom.

Gold and Foreign Exchange

September 2025
The South African International Liquidity Position, measured by Net Gold and Foreign Exchange Reserves, showed growth in both USD and Rand terms for September 2025.

Private Sector Credit Extension (PSCE)

August 2025
In August 2025, credit demand grew by 5.9%, slightly below the anticipated market prediction of 6.0% for the month. Since the initiation of interest rate cuts in September 2024, there has been a noticeable acceleration in overall credit growth, with most subcategories showing increases, particularly in July.
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