North-West University Business School Prof Raymond Parson comments on 4Q 2024 GDP growth figures

North-West University Business School economist Prof Raymond Parsons

Although positive, the mild recovery in 4Q 2024 GDP again confirms that the GNU is right to have put much higher inclusive growth and stronger job creation as SA’s key overarching economic priorities. The latest data again emphasises that growth in SA has been too low for too long and must be remedied by maintaining the right economic environment for investment and growth.

Coming on the eve of the postponed Budget the modest 4Q 2024 GDP growth of 0.6% must therefore also inform the tough choices facing the GNU in finalising an amended Budget. The GNU’s Medium Term Development Strategy itself has set an overall growth target of 3%, which is about the minimum needed for SA to begin to make a big dent in its unemployment levels and help to alleviate poverty.

The GNU Budget on March 12 must therefore show a policy ‘mix’ that carefully calibrates fiscal consolidation, avoids a negative ‘tax-and-spend’ fiscal cycle, and supports growth enhancing measures. Accelerated growth-friendly structural reforms, especially in infrastructure development, need to be urgently implemented to lift SA’s medium term growth to 3%, say by 2027.

Fixed capital formation remains a weak link in SA’s slow and uneven economic recovery, as it still only at about 15% of GDP instead of the NDP’s target of 25% to 30%. Household spending has done most of the ‘heavy lifting’ in SA’s economic upturn so far. Higher sustainable growth also helps to create the economic buffers and resilience needed to mitigate any external shocks caused by elevated global uncertainty.