South Africa dodges recession

South Africa has avoided a technical recession, with growth totalling 0.6% in the final quarter of 2024 following a contraction of 0.1% in Q3.

Technical recessions are characterised by two straight quarters of negative growth. Despite avoiding a recession, South Africa only saw 0.6% GDP growth in 2024 compared with 2023.

This figure is woefully low, and considering South Africa’s population grows at about 1.5% per year, it means that the population is getting poorer.

For the whole calendar year, the finance industry was a notable bright spark, pushing GDP growth higher by 0.8 of a percentage point.

Electricity, gas & water, personal services and mining also expanded over the year. On the other end, agriculture and trade were the largest drags on growth.

In Q4, Stats SA said that growth was led by agriculture, finance and trade on the supply side of the economy, while household spending led growth on the demand side.

Agriculture had by far the most significant impact on GDP growth on the supply side of the economy. Following a sharp decline in Q3 2024, the industry rebounded by 17.2%.

The finance, real estate, and business services industry grew for an eighth straight quarter, with financial intermediation, real estate activities, and other business services being the largest positive contributors.

The trade industry expanded on the back of increased retail, wholesale and motor trade sales, reflecting positively on the demand side of the economy, with household consumption spending rising. .

“Seven industries performed poorly, with manufacturing and transport, storage & communication the most significant negative contributors to growth,” said Stats SA.

“Manufacturing was mainly pulled lower by weaker production levels in the metals & machinery and automotive divisions.”

“Transport, storage & communication recorded a fourth consecutive quarter of decline. The industry witnessed a pullback in land transport and transport support services.”

Mining activity was also down due to lower production levels for manganese ore, iron ore, gold, chromium ore, nickel and copper.

Stats SA added that the demand side of the economy, measured by expenditure on GDP, was mainly lifted by a rise in household consumption spending.

Households spent more on clothing & footwear, food & non-alcoholic beverages, recreation & culture, and household goods.

“The data suggest that consumers might have more breathing space than they did a year ago,” said Stats SA.

In real terms, households spent 2.3% more in Q4 2024 compared with Q4 2023. The trade industry increased its size by 1.6% over the same period.

“The economy witnessed a R16,4 billion drawdown in inventories, in part due to the trade industry accelerating efforts to meet demand that exceeded supply.”

“Mining also drew from its stockpiles to address a rise in export demand while production lagged, contributing to the overall drawdown in inventories.”