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South Africa’s economic outlook in 2024 will be shaped by global economic trends, geopolitical developments, domestic infrastructural challenges, effective implementation of reform commitments by the government, and the pending elections in this country.
Indeed, elections all over the world in 2024 will put the spotlight on the global state of democracy, including in South Africa.
There will be more than 40 elections involving over four billion people, for the first time covering almost half of the world’s population. Western economies as a whole might do better in 2024 than expected at present, but are not out of the woods yet.
With interest rates staying ‘higher for longer’ in many economies, it will for now still be painful for companies and consumers alike in several parts of the global economy.
Read: South Africa to cut interest rates sooner than expected, traders bet
The Chinese economy is also to expected to slow to about 4,5 percent over the next 12 months. Geopolitical risks are seen as on the upside.
The Houthi attacks on Red Sea shipping have raised global trade concerns, with heightened worries of supply chain instability.
The International Monetary Fund (IMF) has forecast world economic growth in 2023 at 3 percent, easing slightly to 2,9 percent in 2024, but with wide divergences between regions and countries. Expert opinion is still divided on whether the US economy will experience a ‘soft landing’ in the months ahead. The US economy continues to surprise on the upside.
Sub-Saharan Africa’s growth prospects for the year ahead are modest.
The region’s GDP grew by 4 percent in 2022 and 3,3 percent in 2023.
The IMF expects economic growth in the region of about 4 percent in 2024, although a couple of other forecasts are somewhat lower. Many sub-Saharan African economies are grappling with high inflation and excessive public debt.
Rising interest rates have now excluded most countries there from global debt markets. Cash has become scarce for most African economies, comments the IMF, making investment in the future problematic for such countries.
A period of uneven growth and elevated borrowing costs generally pose a threat to highly indebted regions.
The SA economy— positive and negative factors
Against this background, what might South Africa’s ‘crystal ball’ look like for its economy? Many South Africans will probably be pleased to see the back of 2023, with its persistent fault lines.
South Africa’s economic performance in 2024 will be driven by trends in exports, consumer spending and investment.
On the positive side there is increasing evidence that rates of inflation are easing, with both the CPI and PPI showing sharp declines in November 2023.
Inflation is now well within the South African Reserve Bank (Sarb) target range of 3 percent-6 percent.
On 23 November its Monetary Policy Committe (MPC) decided for the third time to again keep interest rates unchanged.
Interest rates may well have peaked in SA and, barring shocks, borrowing costs may begin to ease later in the year.
Another welcome development in recent months was not just South Africa’s successful hosting of both the Brics and Agoa (African Growth and Opportunity Act) summits in Johannesburg, but also the extent to which these combined foreign trade events generated positive economic collaboration and business opportunities.
In particular, it now appears that there is more certainty that a revised Agoa will be agreed by the US administration when the matter comes up for renewal in 2025, although there may still be some political resistance later from some circles in the US Congress.
And an enlarged Brics from five to 11 members will potentially have a bigger voice in global economic forums. — Moneyweb
Online Reporter