SA GDP contracted by 0.30% in 3Q24

04

December 2024

Market News Macro Economic Insights

Adriaan Pask

Chief Investment Officer, PSG Wealth

South Africa's economy fell by 0.30% in the third quarter of 2024, the same pace as in 2Q24 and
defying market expectations of a 1.20% growth
Four of the 10 industries tracked by Stats SA recorded losses, agriculture sector declined the most,
specifically due to a decrease in the production of field crops. The decrease in field crops was
significant, falling by 28.80%.
On the expenditure side, data from Trading Economics showed that household consumption rose by
0.50%, and fixed investment recorded a growth of 0.30%. However, government spending fell by 0.10%
and changes in inventories contributed 0.50 percentage point. Net exports contributed positively by 0.1
pps, after decreases of 3.70% and 3.90% in exports and imports, respectively.
On an annualised basis, the economy expanded by 0.30% in 3Q24, remaining the same as in the 2Q24
and defying market estimates of a 1.20% increase.

The FTSE/JSE All Share Index (ALSI) fell had gained 0.88% to 86 485.78 points during Tuesday's morning trading session. Investors were closely monitoring a number of key US labour market reports, starting with the October job openings data on Tuesday.
At 10h36 AM, the rand had depreciated by 0.47% to R18.15 against the US dollar and by 0.11% to R23.02 against the British pound. However, it had appreciated by 0.44% to R19.04 against the euro.
The South African 5-year and 10-year government bond yields rose to 8.28% and 9.04%, respectively. The 30-year yields also rose by 11.15%.

The recent decline in South Africa's economic growth, as reflected in the latest GDP reports, understandably raises concerns across various business sectors. However, it is equally important to acknowledge the positive strides the economy has made in recent months. The absence of loadshedding, improvements in port operations, and a reduction in both inflation and interest rates all contribute to a more favourable economic outlook.
These developments suggest that, despite the setbacks, there are grounds for optimism. As these
factors continue to evolve, we can expect to see further positive changes in the economy's performance
moving forward.
We believe it is particularly important that advisers spend time engaging with clients about their long-term strategy and reiterating that our growth assumptions already take periods of market weakness and
underperformance into account. While it can be difficult to resist the urge to make adjustments to portfolios in light of a challenged economic backdrop, clients are best served by focusing on their long-term plans.
We will continue to monitor any developments that pose a threat to the performance of our equity portfolios
and make adjustments when warranted.