Coal-fired electricity from the country’s power utility, Eskom, is still cheaper for households than leaving the grid and purchasing their own renewable energy infrastructure (solar energy systems). The government has not funded the infrastructure needed to unlock South Africa’s vast renewable energy potential. It is heavily dependent on non-renewable https://www.psg.co.za/ energy (coal), which also worsens global warming and speeds up climate change.
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Sanisha Packirisamy, Chief Economist at Momentum Investments, maintains a 1% growth forecast for 2024, with a potential rebound to 1.8% in 2025. On a more https://personal.nedbank.co.za/ positive note, consumers are receiving some welcome relief in the form of lower interest rates and reduced inflation. However, De Schepper emphasized that the benefits of these changes may not be substantial enough to influence South Africa’s GDP significantly this year. According to Lisette IJssel de Schepper, the Chief Economist at the Bureau for Economic Research (BER), the Q3 GDP slump was mainly driven by a sharp drop in the agriculture sector. This resulted in a quarterly contraction, setting back the entire year’s economic expectations.
- As a result of a November 1993 bilateral agreement, the Overseas Private Investment Corporation (OPIC) can assist US investors in the South African market with services such as political risk insurance and loans and loan guarantees.
- As South Africa navigates these turbulent economic times, attention must remain focused on sustained income growth and job creation, as these will be critical to ensuring a long-term recovery and economic resilience.
- Select a country from the drop-down menu below to compare its actual growth rate and estimated potential growth rate over time.
- The inflation rate is expected to end 2024 well below target and remain there through 2025.
Income levels
Potential growth is defined as the maximum rate of growth that a country can sustain indefinitely. When a country’s actual growth exceeds potential, it exhausts its productive resources, which causes inflation to rise. Countries growing above potential for long periods run the risk of overheating and falling into recession. When a country’s actual growth falls short of potential, by contrast, it fails to make full use of productive resources. Our research further suggests that renewable energy policies, subsidies and programmes made some positive short-term impacts on economic growth, measured as gross domestic product. At this point, the drop in coal consumption was actively dragging down the economy.
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As a result of a November 1993 bilateral agreement, the Overseas Private Investment Corporation (OPIC) can assist US investors in the South African market with services such as political risk insurance and loans and loan guarantees. In July 1996, the US and South Africa signed an investment fund protocol for a $120 million OPIC fund to make equity investments in South and Southern Africa. OPIC is establishing an additional fund – the Sub-Saharan Africa Infrastructure Fund, capitalised at $350 million – to investment in infrastructure projects. The Trade and Development Agency also has been actively involved in funding feasibility studies and identifying investment opportunities in South Africa for U.S. businesses.
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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. Infrastructure reform extends to energy, where South Africa’s ongoing transition away from Eskom’s monopoly is set to redefine the electricity sector. “We must put the risk of loadshedding behind us once and for all,” Ramaphosa affirmed, touting the Electricity Regulation Amendment Act, which enables private investment in generation and transmission networks. The government also aims to mobilize over $13 billion in international climate funding to support the Just Energy Transition (JET).
Government welcomes the country’s economic growth, as reflected in the latest Gross Domestic Product (GDP) figures. According to data released by Statistics South https://deriv.com/ Africa (Stats SA), the GDP increased by 0.4% in the second quarter of 2024, following a 0.0% growth in the first quarter. On the supply side of the economy, various plans that have been set in motion to address supply-side constraints will need to be executed. Launched in 2020, Operation Vulindlela focuses on accelerating reform implementation within the electricity, rail, water, and telecommunication industries.13 Although some argue that these reforms are not ambitious enough14 and that momentum has been slow, there has been some progress. The result is the 10-party Government for National Unity (GNU), representing about 70% of voters (although voter turnout did drop to 58.6% from 66% five years before). It shows how the 2008 financial crisis, which began in the United States, triggered major declines in growth across the world.
Mining has been the main driving force behind the history and development of Africa’s most advanced economy. Large-scale and profitable mining started with the discovery of a diamond on the banks of the Orange River in 1867 by Erasmus Jacobs and the subsequent discovery and exploitation of the Kimberley pipes a few years later. Gold rushes to Pilgrim’s Rest and sasol south africa limited Barberton were precursors to the biggest discovery of all, the Main Reef/Main Reef Leader on Gerhardus Oosthuizen’s farm Langlaagte, Portion C, in 1886, the Witwatersrand Gold Rush and the subsequent rapid development of the goldfield there, the biggest of them all. Despite the challenges facing South Africa’s economy in 2024, there is some optimism for the future.
But it desperately needs to grow the economy at a faster rate, given very high unemployment, poverty and inequality. South Africa’s 2024 GDP outlook has been revised downward due to how to buy sasol shares weaker-than-expected performance in Q3, particularly in the agriculture and manufacturing sectors. While short-term recovery seems unlikely, economists remain cautiously optimistic about 2025, expecting a recovery spurred by structural reforms, consumer demand, and an improved global economic environment. 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.
