Standard Bank remains optimistic that economic growth will surge above 1% in 2024 as a result of additional electricity capacity and the easing of logistical challenges, in spite of serious microeconomic headwinds emerging from the upcoming general election and problems with water supply.
In its 2024 Outlook, Standard Bank yesterday said South Africa’s gross domestic product (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 one-and-a-half 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.
“So just to be sure, in case I’m ambiguous, one-and-a-half stages of trend load shedding decline in the first half of this year, and one to one-and-a-half in the latter half of this year. 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.
“I think water infrastructure failure is going to become a dominant theme in 2024,” he said.
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 ruling 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.”
Ballim said though he was not a cheerleader of President Cyril Ramaphosa, he had done well in terms of executive structures and institutional reform within a variety of institutions such as Eskom, the National Prosecuting Authority and the SA Revenue Service.
“So I would give the president credit on the institutional reform score, and I’m supposed to say maybe five out of 10,” he said.
“So macroeconomic reforms, where we think he has begun to institute doses of repair for the next regime era, but there the executive urgency seems to have been belated,” Ballim said.