South Africa’s economy is showing signs of life again. In the second quarter of 2024, the country’s GDP grew by a modest but promising 0.4%, signalling a slow but steady recovery. After a few tough quarters, key sectors like finance, manufacturing, and trade are driving this momentum, with households and government spending adding fuel to the fire. It’s a positive turn that many of us have been waiting for, and while challenges remain, there’s no denying that the economy is regaining its stride.
Finance and Manufacturing Lead the Way
It’s uplifting to see seven industries recording gains, with the finance, real estate, and business services sector making the biggest impact—adding 0.3 percentage points to the GDP. Manufacturing, which had taken a hit in the first quarter, bounced back by 1.1%, mainly driven by motor vehicles and food production. Trade also surged by 1.2%, thanks to increased activity in wholesale, retail, and the tourism sector.
A big win for the country was having no load shedding during this period, which led to the electricity, gas, and water supply industries growing by 3.1%. That’s the strongest growth we’ve seen in this sector since 2008! I’m sure many of us have felt the relief of uninterrupted power, and the economy clearly benefitted too.
Challenges in Transport, Mining, and Agriculture
While there’s much to celebrate, not every sector thrived. The transport, storage, and communication industry declined by 2.2%, dragged down by strikes and reduced freight volumes. Similarly, the agriculture sector struggled with lower rainfall, heavy rains in KwaZulu-Natal affecting sugar production, and ongoing issues like foot-and-mouth disease. Mining also posted another decline, with reduced output in key resources like iron ore and diamonds.
Consumers Step Up
On the demand side, household spending saw a notable 1.4% increase. Rising consumer confidence played a big role here, with many of us spending more on things like insurance and other services. This was the largest positive contributor to growth on the expenditure side. Even the government chipped in, increasing its spending on goods, services, and civil servant compensation.
Mixed Results for Imports and Exports
Imports rose by 1.7%, mainly driven by trade in vehicles, mineral products, and textiles. Interestingly, there was a build-up of inventories worth R9.6 billion as the supply of goods outpaced demand. Unfortunately, fixed capital investments, which are crucial for infrastructure development, continued to decline, showing a 1.4% drop.
Exports, on the other hand, struggled, with a decline in trade for products like minerals, vegetables, and metals.All in all, it’s encouraging to see some sectors making real progress, and I believe that with continued effort and strategic investments, we’ll see even stronger growth in the coming quarters. Let’s keep this momentum going!For more details on the latest economic figures, feel free to check out the full GDP report from Stats SA.