Mixed outlook for consumers in 2024



Published Feb 13, 2024


Economists have painted a bleak picture of the country’s economy, saying the 1% growth expected for 2024 will not produce much-needed jobs.

However, chief economist for FNB Mamello Matikinca-Ngwenya had a slightly more optimistic outlook, saying that she expected the economy to grow by 1.4% on average between 2024 and 2026.

“Last year, economic activity was stifled by a number of factors, including high inflation. We expect inflation to improve this year and easing interest rates to follow during the year.”

Matikinca-Ngwenya expected a marginal improvement in employment in South Africa in 2024.

“The social relief of distress grant (SRD Grant) is expected to continue and we expect that to support the South African consumer.”

In contrast, economist Dawie Roodt said he felt that economic growth would be less than 1% this year.

“My reason is that we don’t have good governance and we have an ongoing electricity crisis with no end in sight, which limits economic growth.

“Our local authorities and state-owned enterprises are collapsing. All this put together means that it is unlikely for us to have economic growth of more than 1%.”

Roodt believes there will be some positives but not enough to bring about a big change.

“I do think that we will see an interest rate cut of around either 75 basis points or 100 basis points. We might see a marginal decrease in unemployment, but remember it’s not nearly enough to make an impact in South Africa. If it is an economic growth of less than 1% that won’t make a big dent in unemployment.”

Johann Els, Old Mutual Group chief economist, said he does expect this year to be better than last year.

“In 2023 we struggled with an up-cycle in interest rates and inflation.

We also saw a weaker rand, and overall weak confidence in the economy. “In 2024 I expect that we will see a decline in inflation and an interest rate cutting cycle will follow. The South African rand will also be stronger.”

Els added that his prediction for economic growth would be around 1.6% to 1.8%.

“More good news is that the global environment is in a much better position than it was a few years ago. Even though global growth will be weaker than last year, lower inflation globally will be good news for South Africa.

“I think the economic policy of stronger private sector participation needs to continue, especially in energy and logistics. Overall there has been employment recovery since Covid-19 and it doesn't matter that it has been slow.”

Duma Gqubule, an independent economist and researcher, said he was concerned about the unemployment rate.

“According to my calculations the number of jobs that South Africa has created is 150 000 new jobs last year and we are headed in the same direction in 2024.

“This is actually below the number of jobs that were created pre-Covid as we were averaging around 200 000 jobs created in 2019. We are expecting about 1% growth and have an ongoing energy crisis.”

Gqubule also worried about how the situation was being addressed.

“Listening to President Ramaphosa’s State of the Nation Address, it seems that there is no clear plan for economic growth, how to lower unemployment levels and there is no clear way to end load shedding.”

Professor Raymond Parsons of the North-West University Business School said that in 2024 GDP growth was expected to remain low.

“At present, the IMF and National Treasury forecasts of only 1% growth this year seem realistic in the circumstances. Economic growth in 2024 will be driven by investment, consumer spending and exports.

“The latest Nedbank capital spending listings show a dramatic decline in fixed investment in 2023, which is likely to continue in 2024.

“This is attributed to factors such as chronic power outages, high interest rates and elevated policy uncertainty.”

Parsons said the country was at the end of the interest rate hiking cycle due to recent better inflation trends.

“The timing of the easing in interest rates will be decided at the point at which the SARB is convinced that inflation expectations have been firmly anchored, so barring shocks, it will probably be towards mid-2024.”

The Mercury