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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.

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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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