Pretoria: Despite a 0.3% decline in the gross domestic product (GDP) during the third quarter of 2024, the Cabinet has expressed optimism about the country’s economic future. Positive assessments from the International Monetary Fund (IMF) and rating agency Standard and Poor’s (S and P) have bolstered this outlook, as reforms under Operation Vulindlela begin to show results.
According to South African Government News Agency, Minister in the Presidency Khumbudzo Ntshavheni provided a briefing to the media following a Cabinet meeting on December 4. S and P, in November, adjusted South Africa’s economic outlook from ‘stable’ to ‘positive’, acknowledging plans for accelerated economic reforms and increased private investments under the new government of national unity.
Ntshavheni highlighted that the 0.3% GDP contraction was most pronounced in the agriculture, forestry, and fishing sectors, which suffered a 28.8% decline, likely due to drought conditions. Statistics South Africa (Stats SA) confirmed that the sev
ere drought in 2024 contributed significantly to this downturn.
Furthermore, S and P enhanced Eskom’s long-term global-scale foreign and local currency ratings from stable to positive. This improvement is attributed to government efforts to stabilize Eskom’s financial and operational framework, driven by the National Energy Crisis Committee (NECOM), the Eskom Board, and its Executive team.
“Cabinet further welcomed the decision by the South African Reserve Bank to cut the repo rate by another 25 basis points from 8% to 7.75%,” Ntshavheni stated. The Cabinet believes the reduced interest rate will alleviate consumer debt burdens, combat the high cost of living, and encourage business expansion to stimulate economic activity.
In terms of investment, the Cabinet celebrated Saudi Arabia’s commitment to invest R9.5 billion in constructing a platinum smelter and base metals refinery in Limpopo’s Waterberg region. “This new investment is a strong vote of confidence in our nation,” Ntshavheni noted, referencing th
e nation’s surpassing its investment target by 26% under the sixth administration, reaching R1.51 trillion. The aim is now set at R2 trillion in new investments from 2023 to 2028.
On the aviation front, the Cabinet praised South African Airways’ (SAA) impressive progress toward financial sustainability. For the first time since 2012, SAA achieved a net profit of R252 million in the 2022/23 financial year. Group revenue surged from R2 billion to R5.7 billion, despite the airline operating with a limited fleet of six to eight aircraft across nine destinations at the start of the financial year. The airline has since doubled its fleet, expanded intercontinental routes, and increased its network to 16 destinations.