South Africa’s economic forecast for 2024 has been lowered to 1.1%, down from the initial 1.3% predicted in February’s budget review, amid uneven growth and stubborn inflation. The new forecast, announced by the South African Ministry of Finance on Wednesday, aligns with the International Monetary Fund’s projections and is slightly below the South African Reserve Bank’s 1.2% estimate.
While the immediate outlook remains modest, Finance Minister Enoch Godongwana, presenting the Medium-Term Budget Policy Statement to Parliament, outlined a brighter trajectory for the nation’s economy between 2025 and 2027. The South African GDP growth rate is now expected to average 1.8% during this period, up from the 1.2% achieved over the last three years. Minister Godongwana attributed this slight improvement to enhanced energy supply and the formation of a Government of National Unity in June, both of which have bolstered confidence and allowed for a marginal upward adjustment in mid-term growth forecasts.
However, several factors continue to cap South Africa’s growth potential. Persistent issues with logistics infrastructure, as well as structural economic challenges, continue to weigh on the economy. Godongwana stressed that sustaining growth will hinge on macroeconomic stability and ongoing structural reforms, aimed at strengthening state capacity and attracting significant investment in infrastructure. These reforms, he noted, are essential to fostering a resilient economy and ensuring inclusive growth that can elevate the quality of life for all South Africans.
Minister Godongwana acknowledged that while the medium-term outlook provides a foundation for growth, substantial progress depends on maintaining momentum in these reform areas. “Growth should average 1.8% over the medium term, underscoring the pressing need for stronger, inclusive growth to meet the aspiration for a better life for all,” he remarked.
The path forward for South Africa’s economy remains challenging but not without opportunity. By addressing structural limitations, enhancing energy reliability, and advancing infrastructure, South Africa aims to create a stable economic environment capable of delivering lasting improvements for its citizens.
