Positive economic indicators boost SA’s growth trajectory
Positive developments in the economy have given South African households a major boost, with an eye now firmly fixed on improving unemployment.
The South African government has embraced the further positive developments in the economy, viewing them as vital steps toward alleviating household pressures and bolstering South Africa’s growth trajectory.
Acting Director-General (Acting DG) of the Government Communication and Information System (GCIS), Nomonde Mnukwa, expressed that government’s resilient optimism was reinforced by the second quarter’s economic progress, which saw a rise in gross domestic product (GDP), a cut in the repo rate, and a decrease in fuel prices.
Data released by Statistics South Africa in September showed that the GDP rose by 0.4% in the second quarter following 0.0% growth in the first quarter. In addition, the Reserve Bank cut the country's repo rate by 25 basis points bringing it down to 8%. This was the first repo rate cut since 2020.
On the fuel front, the petrol price has been coming down steadily, despite a small increase in November.
In an interview with SAnews, Mnukwa emphasised that these developments offer much-needed relief to South Africans, particularly against the backdrop of the high cost of living.
“The challenge we've been facing has been the very high cost of living, so these developments, while marginal, are certainly a relief for households. The cut in the repo rate, for instance, provides some breathing room for families with loans whether it’s a home, car, or personal loan by reducing the interest they are required to pay,” she said.
The cut in the repo rate lowers borrowing costs, giving households a bit more disposable income and allowing them to better meet their needs.
“This additional disposable income enables South Africans to stretch their Rands in terms of their other needs,” added Mnukwa.
Lower fuel prices were also recognised as an important component of household relief, both in terms of transport as well as food prices. She noted that this will reduce the cost of travel for both those that are employed and job seekers alike.
“The cut in fuel rates brings relief in terms of traveling expenses. While the reduction may be marginal, when combined with the repo rate cut, we believe it will start to make a difference for individuals,” she said.
Growth in GDP and employment a sign of recovery
The government was also encouraged by the GDP expansion following stagnation in the first quarter.Household consumption was the largest contributor to this growth, reflecting the renewed confidence and spending power of South Africans.
The Acting DG highlighted the importance of this development as a signal that the government's efforts are beginning to bear fruit.
"What we're seeing is the start of the positive results of the efforts government has put in place to ensure that it grows the economy and also creates jobs. Demonstrating that the efforts that government is putting in place are starting to yield results.”
Stats SA noted that expenditure on real GDP increased by 0.5% in the second quarter of 2024, following a decrease of 0.1% in the first quarter of 2024.
This improvement is seen as an indication that South Africa's economic policies are beginning to stabilise the economy, even amid global challenges.
In addition to GDP growth, South Africa saw a modest rise in employment, with 42,000 (0.4%) new jobs created in the formal non-agricultural sector, bringing the total employment level to 10.7-million. This is according to the Quarterly Employment Statistics survey released by Stats SA.
Mnukwa noted that these gains represent progress toward reducing the country’s high unemployment rate.
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