South Africa’s continued disappointing economic growth remains the most significant feature of the country’s macroeconomic performance, North-West University Business School economist Professor Raymond Parsons has said following the release of the first-quarter GDP figures by Statistics South Africa on June 4.

“The negative GDP figure of -0.1% quarter-on-quarter again reflects how difficult it has been for the economy to gain momentum in the recent past. Although GDP growth may yet reach about a modest 0.9% in 2024 as a whole, total GDP in the first quarter is in fact lower than the peak reached in the third quarter of 2022,” he noted.

Parsons said the persistent decline in per capita income over several years has meant that South Africa, as a whole, has become poorer.

“South Africa needs to break out of its low-growth trap in order to more successfully tackle the triple challenges of unemployment, poverty and inequality,” he said.

Parsons said it was concerning that gross fixed capital formation (GFCF), which is a major driver of job-rich growth, again declined for the third consecutive quarter, by 1.8%.

“One of the key ingredients for sustained rapid growth is a high level of fixed investment, ideally at 30% of GDP, a critical target outlined in the National Development Plan. It is currently at about 15% of GDP, which remains inadequate for South Africa’s desired economic performance,” he noted.

Looking further ahead, however, with loadshedding in abeyance for now, Parsons noted that Nedbank had previously expected GFCF to accelerate in 2025 based on renewable-energy investment, stronger global growth and firmer commodity prices.

“These outcomes, nonetheless, hinge to a large extent on investor confidence being supported by a predictable and certain macroeconomic framework,” Parsons said.

He said that these latest economic growth statistics send a strong message following the recent national elections on May 29.

“These are the economic imperatives that key political leaders currently engaged in crucial coalition talks must visibly incorporate into their agenda of discussions. The outcome of present coalition negotiations needs to create the necessary political stability and effective governance that support investment, growth and job creation,” Parsons said.

He explained that South Africa needs GDP growth of 3% or more for a bigger, stronger and more stable economy.

“A clear and predictable policy environment then enables businesses to take a long-term perspective on growth and development,” Parsons said.