South Africa Economic Forecast

Our panel largely expects the economy to have stagnated in sequential terms in the third quarter, slowing from Q2’s 0.6% quarter-on-quarter expansion. The ongoing port and railway crisis—preventing the country from cashing in on demand for its minerals—the severe power supply crisis and the shortage of skilled workers are restraining activity. In the fiscal arena, authorities presented the mid-term FY 2024 budget (MTBPS) on 1 November; the plan sees higher taxes, trimmed spending and ramped-up borrowing. The fiscal deficit will widen more than anticipated over the next three years on lower tax revenue, and public debt will peak in FY 2026 at a higher 77.7% of GDP. A fifth of public revenue will go towards debt interest repayment. Ahead of the 2024 general elections, the MTBPS extends monthly welfare payments until March 2025 and confirms the promised state employees’ wage increase.

In September, inflation accelerated to a three-month high of 5.4% (August: 4.8%), largely in line with expectations. Conversely, core inflation eased to 4.5% (August: 4.8%). Despite the headline’s pickup, inflation remained within the South Africa Reserve Bank (SARB)’s 3.0–6.0% target band. Average inflation should return to the mid-point of the target range in Q4 2024.