EXPECTATIONS FOR SOUTH AFRICA’S ECONOMIC PERFORMANCE DURING 2024

Author: Prof Carel van Aardt (Research Director: Market Intelligence Research Division)

THE GOOD, THE BAD AND THE UGLY

There is a broad consensus regarding 2024 economic outcomes, although top economists differ regarding the exact numbers and percentages. Some of the main expectations can broadly be classified into three categories, namely the good, the bad and the ugly.

The good – improved performance or outcomes are expected for:

Higher level of economic growth; Higher level of household consumption expenditure growth; Lower levels of inflation; Lower interest rates & Increase in the number of employed individuals.

The bad – weaker performance or outcomes are expected for:

Higher unemployment rates; Higher government debt to GDP ratio; Increased policy uncertainty due to the national elections in 2024; Growth in the number of downside risks and/or structural constraints to economic growth & Declining levels of foreign and local investor confidence.

The ugly – negative outcomes over the long-term are expected for:

High incidence of income inequality and poverty; Deterioration in physical infrastructure; Negative sovereign investment ratings by the major international ratings agencies; Continued loadshedding & Increased pessimism and socio-political instability.

The implication of these expectations for businesses is that 2024 is anticipated to be a very challenging year on the economic, political and social fronts, with some relief expected in the form of lower inflation and interest rates and some growth in household consumption expenditure and compensation.

In the News

State of the Nation Address 2024 (Source: Parliament)

• Main themes which dominated the annual SoNA included crime and corruption, youth unemployment, loadshedding, the controversial Nation Health Insurance bill and the extension of social grants.
• President Ramaphosa’s SoNA 2024 highlighted both achievements and challenges, emphasizing the need for continued efforts to build a stronger, more inclusive South Africa.

National Budget (Source: National Treasury)

• National Treasury will be utilizing R150 billion of the R500 billion from the Gold & Foreign Exchange Contingency Reserve Account (GFECRA) to pay off the national debt.
• No hikes to income taxes, VAT or fuel and accident levies.
• No inflation adjustments to the personal income tax tables and medical tax credits.
• Social grants will receive inflation-linked increases.

Take Home Pay (Source: BankservAfrica)

• Average real take-home pay of salary earners in South Africa increased by 3.5% year-on-year in January 2024, suggesting significant ongoing erosion in the purchasing power of salary earners.
• The average real take-home pay was recorded at R13 968 in January 2024.

International growth expectations for 2024 (Source: OECD)

• Global: 2.9%
• US: 2.1%
• Euro Area: 0.6%
• G20: 2.9%
• China: 4.7%
• Concerns about disruptions in global trade, with sharp delays and some 100% cost increases following attacks in the Red Sea. Beside shipping problems, the rise of serious geopolitical tensions is a significant risk to trade and inflation, with the conflict in the Middle East threatening the stability of energy markets.

Social Media (Source: DataReportal)

• Ranked by number of monthly active users, Facebook, YouTube, WhatsApp, Instagram and TikTok were rated the most popular social networks worldwide as of January 2024.
• There were 45.34 million internet users in South Africa at the start of 2024, of which 57.3% used at least one social media platform in January 2024.