MTBPS: National Treasury revises SA’s growth forecast lower to 1.1%
The National Treasury has lowered South Africa’s economic growth forecast to 1.1% for 2024, down from the 1.3% projected in the February Budget Review, weighed down by stop-start economic growth and stubborn inflation in the first half of the year.
This growth forecast is in line with the International Monetary Fund (IMF) projections, and slightly lower than the South African Reserve Bank (SARB) forecast of 1.2%.
“Domestically, we forecast a real GDP growth of 1.1% in 2024. This is lower than the estimate of 1.3% in February,” Finance Minister Enoch Godongwana announced when tabling the 2024 Medium-Term Budget Policy Statement (MTBPS) in Parliament today.
However, Godongwana said the economy has since strengthened in response to the suspension of power cuts since March, improved confidence following the formation of the Government of National Unity (GNU) in June, better than-expected inflation outcomes in recent months and reduced borrowing costs.
Godongwana said all these factors were expected to continue supporting the economy over the period ahead, and the prospects for the economy were improving, with better energy supply supporting a marginal upward revision to medium-term growth.
According to Treasury, GDP growth is projected to average 1.8% from 2025 to 2027, up from 1.2% in the preceding three years.
Godongwana said the pace of growth was still being limited by persistent – though gradually easing – constraints, particularly in logistics infrastructure.
Godongwana said faster growth depended largely on maintaining macroeconomic stability, the continued implementation of structural economic reforms, improving state capabilities and supporting higher infrastructure investment.
“Over the medium term, growth is forecast to average 1.8%. This underscores the need for higher inclusive growth to meet the aspiration of a better life for all,” he said.
“Turning to the international outlook, global economic growth is forecast at 3.2% in 2024 and 2025. Global trade is expected to grow by an annual average of 3.3% over the same period.
“There are several risks to this outlook. These include persistent geopolitical tensions, and the threat of escalating conflict in the Middle East remains a concern. Wars elsewhere, such as in the Sudan and the conflict between Ukraine and Russia, threaten regional and international stability, as well as global trade. These risks imply that emerging markets and developing countries such as South Africa will continue to face headwinds over the medium term.”
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