In addition, adverse weather conditions continue to affect lives and livelihoods and damage infrastructure. As the 2024 February Budget Review approaches, attention will be on measures and reforms to support fiscal consolidation, and the better management of state-owned entities. This is a critical time for South Africa, especially with elections posing additional challenges to public expenditure, and even more so as the country enters uncharted political waters. Access more insights for the consumer spending, housing, business investment, globalization & international trade, fiscal & monetary policy, sustainability, equity, & climate, labor markets and prices & inflation sectors. South Africa’s long-standing energy challenges have significantly constrained growth, but improvements at Eskom and the integration of private-sector renewable energy projects are yielding positive results. South Africa’s gross domestic product (GDP) grew by 0.4% in the second quarter of 2024, an improvement from the stagnant (revised) -0.1% growth in the first quarter.
Sustainable economic growth in South Africa will come from renewables, not coal: what our model shows
Addressing Parliament in Cape Town City Hall today, he outlined an ambitious framework for national renewal, emphasizing economic revitalization, infrastructure investment, and the country’s place in the shifting global order. Since the State of the Nation Address (SoNA) in February last year, our nation has witnessed profound political changes through the establishment of a multi-party government after the seventh democratic elections in May 2024. This outcome reshaped our political landscape and paved the way for the establishment of a Government of National Unity that brought together 10 political parties from across the political spectrum united by a common goal.
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Our country is also celebrating the recovery of the vital commuter rail network in the past year which resulted in 31 out of 40 key passenger corridors being operational. Likewise, the progress in the recovery of freight rail has resulted from the partnership between government and the private sector initiated during the 6th administration. This has allowed us to deal with longstanding operational challenges at ports, including the issue of container terminals in Durban and Cape Town, along with infrastructure upgrades. Our research further suggests that renewable energy policies, subsidies and programmes made some positive short-term impacts on economic growth, measured as sasol gas supply gross domestic product.
- We set out to discover whether renewable energy in South Africa, such as wind or solar power, supports sustainable economic growth.
- Since the State of the Nation Address (SoNA) in February last year, our nation has witnessed profound political changes through the establishment of a multi-party government after the seventh democratic elections in May 2024.
- With the economy struggling to gain momentum, economists at Nedbank have taken an even more cautious view.
- The speech took on a notable diplomatic tone, reflecting South Africa’s role in an increasingly fragmented global order.
- But household final consumption expenditure growth has been flat, given the high cost of living and the country’s energy crisis.
- In its January 2025 World Economic Outlook update, the IMF revised GDP growth expectations to just 0.8%, a marginal improvement from the 0.7% recorded in 2023, the country’s worst year of load shedding.
However, if reforms are implemented successfully and investor confidence strengthens, South Africa has the potential to exceed these forecasts and move closer to its 3% growth goal. Despite the immediate challenges, the IMF has maintained its projections for 2025 and 2026 at 1.5% and 1.6%, respectively, with a https://www.tradingview.com/ gradual recovery expected over the medium term. However, concerns linger about the stability of the GNU and the government’s broader policies. For instance, proposals targeting private healthcare and initiatives like BEE are sparking debates about their potential impact on business confidence. Compounding the problem, South Africa grapples with ongoing water and logistics crises, exacerbated by years of neglected infrastructure.
How Much South Africans Need to Earn for a Decent Life in 2025
Our research suggests that relying on non-renewable energy, like coal, won’t lead to long-term growth for South Africa. This is because non-renewables are not a reliable source of energy, as shown by loadshedding. Together with student Tsepiso Sesoai, I did research comparing the impact of renewable and non-renewable energy on economic growth in South Africa. The Biden administration’s recent decision to suspend some HIV and TB program funding for Africa — which accounts for 17% of South Africa’s HIV spending — was met with concern. “We are looking at various interventions to address the immediate needs and ensure the continuity of essential services,” Ramaphosa stated, underscoring the country’s reliance on international partnerships.
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Unlocking faster growth will require greater capital formation, and effective ways to deliver infrastructure to create the foundation for the economy to grow in the future. This has helped boost confidence (which dropped sharply ahead of the elections) on the supply side of the economy, as shown by various business surveys. Our model shows that https://www.alexforbes.com/ an increased supply and higher consumption of non-renewable energy causes long-term economic growth over year cycles.
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Government welcomes positive GDP growth in the second quarter of 2024
Yet, when people think about moving away from coal, they worry about job losses in the coal industry. Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you https://www.coronation.com/ are agreeing to our Terms of Use and Privacy Policy.
In the first phase, reforms under OV have attracted over 390 billion rand in investment in the energy sector.34 The focus on the ongoing implementation of structural reforms—although at times painful and resulting in short-term trade-offs—is at the core of the GNU’s medium-term strategy. The private sector is expected to play a significant role in driving South Africa’s economic growth in 2025. Industries such as renewable energy, logistics, and fintech are poised for expansion as government policies become more business-friendly.
Lower interest rates are likely to reduce borrowing costs for businesses and consumers, stimulating spending and investment. In addition, the introduction of the two-pot retirement system has provided temporary financial relief for households, but real income growth and job creation will be key to driving more sustainable consumer spending in the future. De Schepper pointed out that even without the agriculture decline, South Africa’s economy would still have faced sluggish growth. The manufacturing sector and the broader industrial production network are grappling with multiple challenges.