Statistics SA will announce the GDP figures for the third quarter of 2024 on Tuesday. GDP grew by only 0.6% in 2023.
Although there were many positive developments in the third quarter of the year in South Africa, such as an end to load shedding and a peaceful election that led to the formation of the government of national unity, economists do not expect the GDP figures for the third quarter of 2024 to shoot the lights out.
According to the International Monetary Fund (IMF), gross domestic product (GDP) measures the monetary value of final goods and services, those bought by the final user, produced in a country in a given period, such as a quarter or a year. It counts all of the output generated within the borders of a country.
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Nedbank economists expect GDP to come in at 0.5%
Crystal Huntley and Nicky Weimar, economists at the Nedbank Group Economic Unit, say the improvement in operating conditions, particularly concerning electricity, supported the economy over the quarter.
“The moderate political outcomes from the May general elections, a stronger Rand, the rebound in the equity market and the rapid inflation decline also improved business and consumer sentiment.”
However, they say, the extent of the boost was diluted by a still challenging operating environment, subdued global demand conditions and still high interest rates, although the circumstances were enough to lift growth in mining, manufacturing and construction over the quarter.
“Services activity also picked up modestly. However, stretched household finances still weighed on wholesale sales, motor trade, food services, freight transport, real estate activity and household credit demand. Altogether, we forecast real gross domestic product (GDP) growth of about 0.5% in the third quarter compared to the second quarter, slightly faster than the 0.4% in the second quarter.”
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GDP recovery to gain moderate momentum in final quarter
Huntley and Weimar expect the recovery to gain moderate momentum in the final quarter of this year as reliable electricity supply and further slight improvements to logistics will be conducive to production.
“This, coupled with the moderate political outcome of the government of national unity (GNU) and the anticipated upturn in the business cycle, should lead to a more upbeat mood among businesses and consumers.
“Global and domestic demand will be reinforced by continued disinflation and monetary policy easing. On the local front, access to contractional savings through the two-pot retirement system, which came into effect in September, will provide an additional boost to spending, both directly and indirectly, as consumers use these funds to repay debt and restore their financial health.”
They expect the economy to grow by 0.6% in the fourth quarter and by 1% in 2024. Huntley and Weimar say they expect a moderate recovery over the next three years, with GDP growth averaging around 1.7%.
“Domestically and globally, falling inflation and lower interest rates will likely boost demand. However, much depends on the need for deep-seated reform in the energy and logistics space and the effect on global demand from Trump 2.0.”
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FNB economists expect GDP growth of 0.3%
Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole and Koketso Mano, economists at FNB, say GDP growth in the second quarter was broad-based, with positive contributions from seven out of ten sectors.
“However, GDP demand components showed a mixed performance, with household and government spending rebounding, while fixed investment and exports contracted. For the third quarter, we expect GDP growth momentum to have been sustained, at an increase of 0.3% compared to the previous quarter and 1.1% compared to a year ago.
“This is supported by quarterly increases in electricity and mining production, along with marginal improvements in manufacturing output. Retail trade sales will also provide support to GDP growth, but this will be counteracted by a decline in wholesale and motor trade sales.”
They warn that the volatile agricultural sector remains a potential swing factor, which could either bolster or weaken overall growth outcomes.
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Bureau for Economic Research economist expects 0.2% to 0.4%
Tracey-lee Solomon, economist at the Bureau for Economic Research (BER), says after flat growth in the first quarter, the economy showed a modest recovery in the second quarter.
“We expect quarterly growth to come in at 0.2% – 0.4% in the third quarter, with lingering uncertainty about the volatile agriculture sector and the difficult-to-measure tertiary sector. High-frequency data from Statistics SA indicates expansions in mining and construction but contractions in manufacturing and trade. Possible revisions to the GDP figures for the second quarter may also affect the growth rate for the third quarter.”
