SA’s economic growth could surge above 1%

STANDARD Bank remains optimistic that economic growth will surge above 1% this year as a result of additional electricity capacity and the easing of logistical challenges, in spite of serious microeconomic headwinds emerging from the coming general elections and problems with water supply.

In its 2024 Outlook, Standard Bank yesterday said South Africa's GDP will rise by 1.2% this year, in line with the SA Reserve Bank's recent growth forecast.

Standard Bank chief economist Goolam Ballim said 2024 would be a year of two halves, in which the first half will concentrate on election forecasting, while the second half will be welcoming the election of a new president.

Ballim said South Africa's economy had remained resilient to a number of challenges, and the issues of energy supply were looking up.

“We think we have turned the corner on Eskom. We think 2024 will see reduced load shedding, especially with the return of units at Kusile and Medupi, the injection of rooftop solar combined with embedded energy,” Ballim said.

“That, we think, will effectively, in a practical way, contribute to a reduced load shedding of roughly one-and-ahalf stages of load shedding during the first half of this year. And we think in the latter half of this year, it could be between one and one-and-a-half …

“That does not imply that we will be free of load shedding for the course of 2024. We anticipate substantial trend level decline even if on occasions there will be bursts of switch-off.

“Having said that, though, while we're making the statement that we think Eskom will be more reliable in 2024, we think the momentum towards fixing Transnet will also pick up.”

However, Ballim did flag the persistent issue of crumbling water infrastructure, saying that it would become a little more pronounced this year.

Ballim also said that jobs growth would become better in the latter part of the year, especially in the construction and services sectors as these offer potential for public sector infrastructure spending.

He said this was premised on the 65% probability that the ANC would win between 45% and 50% of the vote and then get an agreeable coalition partner, which would invite some level of private sector investment uptake.

“So the fact that we're signalling, let's say over the next three years, 4(%) to 5% fixed investment growth, we think that that would be encouraging of an economy-wide uplift,” Ballim said. “So we see your services sector, retail and home sales trade, some level of industrial, and we think financial services will continue to see an uptick.” |