In Q2 2024, South Africa's economy grew by 0.4%, driven by finance, manufacturing, trade, and electricity sectors. Household and government spending, along with inventory build-up, also contributed positively.
The finance industry had the largest impact on GDP growth, while manufacturing rebounded by 1.1%, and trade rose by 1.2%. Electricity, gas, and water supply surged 3.1% due to uninterrupted power. Construction showed slight growth, but transport and agriculture sectors contracted.

Household consumption increased by 1.4%, driven by higher spending on insurance. However, gross fixed capital formation fell for the fourth consecutive quarter. Exports weakened, particularly in vegetable and mineral products, vehicles, and base metals.

This is according to second quarter GDP figures released by Statistics SA on Tuesday, 3 September 2024.

"This could represent a turning point in SA’s business cycle, as our growth performance has clearly been too low for too long. The weak growth performance confirms the top priority now given to inclusive job-rich growth by the Government of National Unity (GNU)," said NWU Business School economist Raymond Parsons.

"This also confirms the extensive damage to SA’s economic growth that Eskom’s previous load shedding, in particular, did earlier in terms of widespread disruption, heavy costs and debilitating economic uncertainty. As load shedding has recently receded, so business and consumer confidence have recovered to better levels.

Growth risks persist

Further commenting on the second quarter GDP figures, Parsons noted that the data shows that renewed energy security since March 2024 has helped the country’s growth performance to gradually cross an important threshold.

In 2Q 2024, growth seems to have been largely dependent on much stronger household spending, he said.

The economy is not, however, on cruise control, he added.

"Both gross fixed capital formation (GFCF) and exports remain weak links in the 2Q 2024 growth scenario. Total GFCF, especially, is a major driver of future economic growth.

"Complacency must, therefore, be avoided, as salient risks to the growth outlook linger, and there are still daunting socioeconomic challenges to be tackled."

Reform urgently needed

Urging the Government of National Unity (GNU) to address economic constraints expeditiously given that real GDP grew marginally by 0.4% in Q2 2024, FMF chief executive officer David Ansara has criticised the GNU for insufficient reform.

Despite increased investor confidence post-elections, Ansara warned that without rapid policy changes, the coalition risks losing goodwill and facing challenges in 2029. He said the FMF advocates for reducing state intervention and promoting economic freedom through their “Liberty First” policy agenda.

“We are rapidly approaching the end of the first 100 days of the GNU. The honeymoon period is almost over. So far, we have witnessed precious little by way of concrete reform in any department. In fact, what we have seen is the deeply worrying reversion to failed and harmful policies such as National Health Insurance, preferential procurement, and restrictive industrial policy, amongst others,” explains Ansara.

“The fastest way to grow the economy is to shrink the state,” Ansara said. “This requires deregulation of commerce, liberalisation of labour markets and a reduction of the size and scope of government.

“Human development both at the individual and at the societal level can only occur to the extent that people, businesses and communities have the freedom to pursue their interests without being unduly constrained by the dictates of an overzealous State."

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