- GDP growth contracted by a marginal 0.1% in Q1 2024, from a revised 0.3% increase in Q4 2023.
- Despite a surge in growth in the agricultural sector, six out of ten sectors performed poorly in Q1 2024.
- This was mainly due to an uptick in load-shedding in Q1 which impacted energy intensive sectors such as mining and manufacturing.
- On the demand front, the decline was broad-based, where all expenditure components declined.
- Looking ahead, growth will largely be dependent on softer inflation and the potential boost to export manufacturers.
- For the first time since democracy, South Africa has will now be governed by a coalition government.
- Thus far, at the local government level, coalition governments have failed to deliver on critical services.
- The newly formed government has put forward a nine-point agenda, with an aim to prioritise structural reforms, address basic infrastructure and weak investments.
- The points in the agenda are indicative that South Africa remains on course to achieve the desired policy outcomes under the previous administration, which broadly favour growth.
- However, a key risk will be navigating coalition politics and while policies seem pro-growth, fiscal discipline must be maintained.
- Over the coming days, Rand movements may reflect sentiment around the finer details of the newly formed government.
- The current account deficit (CAD) narrowed to 1.2% of GDP in Q1 2024, from 2.3% in Q4 2023.
- This was largely due to a favourable trade surplus. The trade balance is expected to remain in surplus territory for most of 2024.
- On this front, the trade surplus widened to ZAR10.5 billion in April from a revised ZAR9.2 billion in March.
- Exports grew 3.4% YoY in April and imports continued to contract, but at a softer pace of 0.6%.
- Annual consumer price inflation was 5.2% YoY in May, unchanged from April.
- The SARB left interest rates unchanged in its May meeting. A rate cut may be on the horizon, but this depends on a continued easing of inflation.
- Unemployment increased to a one year high at 32.9% in Q1 2024, up from 32.1% in Q4 2023.
http://lnk.careedge.in/gtrack?clientid=87449&ul=%0DAQIFWQ9OBEgMXlRceRddSkNaXQFABwgUAQZdAlgKFgVcVB9J&ml=BQAJUwgCBUhVTAYCCVUNTg==&sl=ckxyHW1hSGcoZE5fVwgWUVZBVAFSAQFPDQtJUw==&pp=0
