Business pulse: Business confidence depressed at 30 points
8 Mar, 2024

Sanisha Packirisamy, Economist at Momentum Investments


Momentum Investments have released their report based on Business pulse: Confidence depressed at 30 points prepared by the Momentum Investments Macro Research Team.


Please see below, a summary of highlights from the team, as well as a PDF of the research paper.





  • According to Statistics South Africa (Stats SA), SA’s economic activity was weak in the fourth quarter of 2023. Real gross domestic product (GDP) increased by 0.1% quarter-on-quarter (q/q) in the fourth quarter following a contraction of 0.2% q/q in the third quarter.


  • The transport, storage and communication industry (2.9% q/q) as well as mining and quarrying (2.4% q/q) recorded robust growth. The agriculture industry (negative 9.7% q/q) and trade (negative 2.9% q/q) were a drag on economic growth.


  • In terms of the expenditure approach, economic growth was mainly lifted by a change in inventories (contributing one percentage point) while the biggest negative contribution came from imports (detracting 1.2 percentage points).


  • On an annual basis, real GDP expanded by 0.6% year-on-year (y/y) in 2023 according to the production method. This was lower than growth in the previous year (1.9% in 2022) and the pre-pandemic average growth rate of 2.7%.


  • The agriculture sector recorded the biggest decrease in 2023 (negative 12.2% y/y). On the expenditure side, household consumption increased slightly (0.7% y/y) in 2023 compared to 2.5% y/y in 2022 which is reflective of the higher cost-of-living in 2023 and weak consumer confidence.


  • On a sectoral basis, the biggest contributor to SA’s economic growth in 2023 was the tertiary sector growing by 1.3% y/y. The primary sector was mostly down throughout the year and contracted by 5% y/y.


  • Economic activity in 2023 was constrained by a myriad of factors including power outages, inefficiencies in the logistics network, lower commodity prices, modest global growth and tight monetary policy. We expect slightly better economic growth in 2024 of 1%. Our forecast is in line with the International Monetary Fund’s (IMF) projection but slightly lower than the Reuters median consensus (1.1%), the SA Reserve Bank’s (SARB) projection of 1.2% and National Treasury’s estimate of 1.3%.


  • An improvement in economic activity this year is premised on a reduction in power cuts, some anecdotal evidence of easing constraints in the logistics network, easing inflation and a reduction in interest rates. However, the estimated GDP forecast remains subdued and growth is expected to remain weak over the medium term.


  • Household consumption expenditure (accounting for around 60% of GDP) is expected to boost economic growth in 2024 due to a rise in real wages and lower interest rates partly alleviating consumers’ financial burden. Growth in fixed investment could increase further in 2024 but will remain weak outside of renewable energy-related investment.


  • On the production side, the agriculture industry may pick up slightly in 2024 due to a reduction in loadshedding and contained animal diseases. However, factors that could negatively affect agriculture production are looming. The outlook for mining and manufacturing remains subdued amid lower global commodity prices and high input costs. There are signs of better activity in the construction industry, from a weak base, which could be supported by energy, logistics and water-related infrastructure projects.






@Sanisha Packirisamy, Momentum Investments
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