Sanisha Packirisamy, Economist at Momentum Investments

• As reported by Statistics South Africa (Stats SA), seasonally adjusted (sa) real gross domestic product (GDP) lifted by 0.4% quarter-on-quarter (q/q) in the second quarter of 2024, following flat growth (0% q/q, revised up from negative 0.1% q/q) in the first quarter of 2024.

• On the production side, seven of the 10 industries grew, with the fastest growth recorded in utilities (electricity, gas and water). The transport, agriculture and mining industries all contracted in the second quarter.

• On the expenditure side, economic growth was buoyed by the rebound in household consumption expenditure (1.4% q/q, contributed 0.9 percentage points). Households spent more money across most of the product groups, with miscellaneous goods and services as well as clothing and footwear registering the highest growth rates.

• Going forward, household consumption is expected to get a boost from the two-pot retirement reform, interest rate cuts (with a lag) and lower inflation.

• Government expenditure and inventories also contributed positively to economic growth in the second quarter. On the other hand, gross fixed-capital formation (GFCF) contracted for the fourth consecutive quarter and net exports detracted from growth.

• Eskom’s summer baseline 2024/25 projection indicates that SA will likely not experience loadshedding until 31 March 2025. If achieved, this would mark one year without loadshedding, something last experienced in 2017.

• The positive electricity outlook this summer is in part due to an anticipated 2 500 MW of additional generation capacity expected by January 2025.

• The estimated additional impact on GDP of the early pension withdrawals, according to the SA Reserve Bank (SARB), is between 0.1 to 0.3 percentage points in 2024, depending on the scale of withdrawals. A bigger impact of between 0.3 and 0.7 percentage points is estimated in 2025, again depending on the scale of withdrawals, and no impact on GDP is estimated in 2026. These estimates are small relative to other countries, e.g. Chile.

• The expected increase in household consumption from the two-pot reform and the projection of a more stable electricity supply will support economic growth in the second half of 2024. Consequently, we have revised our growth estimate for 2024 slightly up to 1.1% in 2024, previously 1%. Our 2025 growth forecast has also improved to 1.8%, previously 1.7%

You can read the full report here.

ENDS