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South Africa’s economy is set to forge an upward path this year after misfiring for more than a decade, boosted by steps to address growth constraints and higher consumer spending, according to top-ranked analysts.
Economists surveyed by Bloomberg expect growth of 1,7 percent this year, compared with 0,7 percent estimated for 2024 and less than 1 percent on average in the prior 10 years.
The economy has “a credible prospect of stabilisation” after many years of deterioration, said Elna Moolman, head of South Africa macroeconomic research at Standard Bank Group.
Factors conducive to growth include political cooperation through a coalition government formed by the African National Congress after it lost its outright majority in elections last year. Lower interest rates, higher levels of fixed investment and the ongoing improved performance of the country’s electricity, transport and logistics sectors will also have a positive impact, said Kenneth Creamer, an economist at Wits University in Johannesburg.
Economists expect the central bank to lower interest rates by 50 basis points to 7,25 percent in the first quarter with inflation seen remaining below the 4,5 percent midpoint of its target range. That would total 100 basis points of cuts since its easing cycle started in September, and could add 30 basis points to economic growth as consumer spending increases, said Reezwana Sumad, a senior research analyst at Nedbank CIB.
Still, expansion of 1,7 percent won’t be enough to reduce one of the world’s highest poverty and unemployment rates. —Bloomberg.
Online Reporter