Ina Opperman

By Ina Opperman

Business Journalist


Economic outlook positive for jobs, inflation, interest rates

Is it all gloom and doom for the macro-economic future of South Africa or is there reason to be positive about the future?


The latest economic outlook seems to be positive for jobs, inflation and interest rates in a time where consumers have become used to declining household income and frequent rolling blackouts.

According to the latest PwC Economic Outlook Report for 2023, there is some good macro-economic news, such as growing employment despite rolling blackouts, the fact interest rates have probably peaked, a slower decline in salaries and wages and lower inflation.

Data from Statistics SA indicates salaries and wages from formal and informal employment accounted for 53% of household income in South Africa last year, while 23% of income came from government grants, including child and disability grants.

Slow growth in salaries and wages, as well as limited government funds to increase grant payments, resulted in household expenditure increasing by only 2.5% in 2022, while it increased by just 0.7% in the first quarter compared to a year ago.

ALSO READ: IMF has some hope for SA economic growth

More solar, more jobs

PwC expects solar power investment to reduce load shedding and increase employment growth in 2024 and said the strong increase in jobs over the past year is encouraging and reflects a growing resilience on the part of private businesses against the negative impacts of electricity outages.

The decline in the inflation rate is also good news, and PwC said it believes the repo rate has likely peaked alongside the decline in consumer price inflation. The next step in the interest rate cycle will most likely be a reduction in the repo rate as inflation decreases further.

With the Reserve Bank expecting inflation falling to an average of 5.0% in 2024 and 4.5% in 2025, PwC expect there will be room to start cutting rates around the middle of next year pending if inflation does not increase again.

PwC does not expect interest rates to return to the low levels observed in 2020, given the increase of 475 basis points over the course of nearly two years, but said instead two percentage points could likely be shaved off towards the end of 2025.

Based on current forecasts, PwC expects the repo rate will be around 6.25% at the end of 2025, with headline consumer price inflation of approximately 4.5% bringing the repo rate back to pre-pandemic levels and support household spending.

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