Image Source: SAFTU
Local – The South African government has welcomed the latest GDP figures, which show that the economy grew by 0.6% in the fourth quarter of 2024. This follows a 0.1% contraction in the third quarter, indicating a modest but essential recovery.
The agriculture, finance, and trade sectors primarily drove growth. At the same time, household spending was the main contributor to demand.
Government Communication and Information System (GCIS) Acting Director-General Terry Vandayar highlighted the significance of the rebound, stating, “The latest GDP data is encouraging and signals a welcome recovery, especially because one of the government’s immediate priorities is to ensure positive economic growth that will encourage business development and provide more opportunities for employment, especially for women and the youth.”
Agriculture, Finance, and Trade Support Growth
The agriculture sector played a key role in the fourth-quarter recovery, rebounding by 17.2% after a sharp decline in the previous quarter.
According to Statistics South Africa, “agriculture had the most significant positive impact on GDP growth on the supply side of the economy.” This improvement was largely due to higher production of field crops and animal products, contributing 0.4 percentage points to GDP growth.
The finance, real estate, and business services sector continued its eighth consecutive quarter of expansion, driven by financial intermediation, real estate activities, and other business services.
Meanwhile, the trade industry recorded growth, supported by “increased retail, wholesale, and motor trade sales,” reflecting a rise in consumer activity.
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Challenges in Manufacturing, Transport, and Mining
Despite the overall positive performance, seven industries experienced declines, with manufacturing and transport being the most significant contributors to weaker growth.
Manufacturing was “mainly pulled lower by weaker production levels in the metals & machinery and automotive divisions.” At the same time, the transport sector recorded its “fourth consecutive quarter of decline,” primarily due to reduced activity in land transport and transport support services.
The mining sector also faced challenges, with production declines in “manganese ore, iron ore, gold, chromium ore, nickel, and copper.” While coal and platinum group metals recorded gains, they were not enough to offset losses in the sector.
Increased Household Spending and Inventory Reductions
On the expenditure side, household spending rose, reflecting improved consumer confidence. Households spent more on “clothing & footwear, food & non-alcoholic beverages, recreation & culture, and household goods,” suggesting a recovery in discretionary spending.
However, the economy saw an R16.4 billion drawdown in inventories, as businesses relied on stockpiles to meet demand, particularly in the trade and mining sectors. This trend indicates that supply struggled to keep pace with growing consumption.
Investment in fixed assets remained weak, with gross fixed capital formation declining due to reductions in residential and non-residential buildings, machinery, and equipment.
Government’s Commitment to Economic Growth
Vandayar stated that the government remains focused on fostering sustained economic recovery through policies to support small businesses, enhance infrastructure development, and attract investment. These efforts are intended to create an environment that encourages long-term growth and resilience.
He reaffirmed the government’s commitment to building on this momentum, stating, “Government will continue to build on this momentum to drive even greater economic resilience.”
