Finance Minister Enoch Godongwana disclosed during the 2024 Budget Speech in Cape Town that South Africa’s economy is anticipated to have expanded by 0.6 percent last year, with a projected increase to 1.6 percent over the next three years.
Despite a more favorable global outlook for 2024, Godongwana acknowledged that South Africa’s immediate growth prospects are constrained by lower commodity prices and structural challenges.
“We forecast a real GDP growth of 0.6 percent in 2023, down from the 0.8 percent estimated in the 2023 Medium-Term Budget Policy Statement,” Godongwana remarked, attributing the revision to weaker-than-expected performance in household consumption and fixed investment in the third quarter of 2023.
Looking ahead, he stated, “Between 2024 and 2026, growth is expected to average 1.6 percent,” citing anticipated improvements in power supply, lower inflation, and enhanced credit extension as supportive factors.
However, Godongwana cautioned about domestic risks, including persistent electricity supply constraints, logistical bottlenecks, and elevated sovereign credit risk, emphasizing the imperative to accelerate economic expansion to meet developmental needs.
The finance minister also noted a projected worsening of the budget deficit for the financial year 2023/2024, from 4 percent to 4.9 percent of GDP, before an anticipated improvement to 4.5 percent by 2024/2025 and further to 3.3 percent by 2026/2027. Debt is expected to peak at 75.3 percent of GDP in 2025/2026.
In response to growth impediments, Godongwana highlighted the government’s comprehensive structural reform agenda, spanning sectors such as electricity, logistics, water, telecommunications, and visa policies.
