Good news as GDP increases by 0.6% in fourth quarter of 2024

South Africa’s economy grew in the fourth quarter of last year, with GDP increasing by 0.6%, mainly thanks to agriculture, finance and trade on the supply or production side of the economy, with household spending leading growth on the demand or expenditure side.

According to Statistics SA, announcing the GDP today, agriculture had the most significant positive effect on gross domestic product (GDP) growth on the supply side of the economy. After a sharp decline in the third quarter, the industry rebounded by 17.2%, lifting GDP growth by 0.4 of a percentage point, mainly thanks to an increase in the production of field crops and animal products.

The finance, real estate and businesses services industry grew for an eighth consecutive quarter, with financial intermediation, real estate activities and other business services the largest positive contributors to growth.

The trade industry expanded on the back of increased retail, wholesale and motor trade sales. Statistics SA says this reflected positively on the demand side of the economy, with household consumption spending increasing in the fourth quarter.

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Poor performers in GDP

However, seven industries performed poorly, with manufacturing, and transport, storage and communication the most significant negative contributors to growth. Statistics SA says manufacturing was mainly pulled lower by weaker production levels in the metals and machinery and automotive divisions.

Transport, storage and communication also recorded a fourth consecutive quarter of decline, with a pullback in land transport and transport support services.

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Mining activity also decreased due to weaker production levels for manganese ore, iron ore, gold, chromium ore, nickel and copper. However, coal and platinum group metals were positive, but not enough to keep the industry above water.

The demand side of the economy, measured by expenditure on GDP, was mainly lifted by an increase in household consumption spending.

Notable increase in household spending on GDP

Households spent notably more on a range of products that includes clothing and footwear, food and non-alcoholic beverages, recreation and culture and household goods. Statistics SA says the data suggests that consumers might have more breathing space than they did a year ago.

In real terms, households spent 2.3% more in the fourth quarter of 2024 compared to the fourth quarter of 2023. The trade industry increased its size by 1.6% over the same period.

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The economy witnessed a R16.4 billion drawdown in inventories, partly due to the trade industry accelerating efforts to meet demand that exceeded supply, Statistics SA says.

Mining also drew from its stockpiles to address an increase in export demand, while production lagged, contributing to the overall drawdown in inventories.

Investment in infrastructure and other fixed assets (gross fixed capital formation) was weaker in the fourth quarter, mainly due to a decline in residential buildings, machinery and other equipment and non-residential buildings.

Finance industry the star in 2024

Statistics SA points out that the finance industry was the notable bright spot in 2024, pushing GDP growth higher by 0.8 of a percentage point, while electricity, gas and water, personal services and mining also expanded in 2024.

On the downside, agriculture and trade were the most significant drags on growth.