World Bank lowers South Africa’s 2024 growth expectations – but still higher than 2023

The World Bank expects South Africa’s economy to grow by 1.3% in 2024 – down from its June 2023 projection but still almost double that of last year.

In its Global Economic Prospects, released in January 2024, the World Bank said growth in South Africa is projected to firm to a still-subdued 1.3% in 2024 and then edge up to 1.5% in 2025. 

The organisation expects South Africa’s 2023 GDP growth to be around 0.7% – slightly higher than other estimates.

For example, Investec expects 0.5% growth in 2023 and 1% growth in 2024.

The World Bank attributes its higher estimates to expected improvements in South Africa’s energy availability in the medium term through energy sector reforms.

While higher than other estimates, the World Bank’s 1.3% projection is lower than the bank predicted last year. In July 2023, the World Bank expected South Africa’s economy to grow by 1.5% in 2024.

The bank said this lower revision is because, despite expected improvements in the country’s energy supply, “increasingly prevalent infrastructure bottlenecks, exacerbated by the slow pace of structural reforms, are likely to continue to limit the country’s growth potential”.

In addition, fiscal pressures from underperforming revenue and the rising costs of social transfers and subsidies of state-owned enterprises, as well as rising public sector wages and debt-service payments, may require curbs on other government spending to reduce the fiscal deficit. 

South Africa’s government is facing a deficit of around R347 billion for the 2023/24 financial year – over 40% more than the previous year.

This is according to Investec chief economist Annabel Bishop, who said the deficit to date for 2023/24 is already over R300 billion.

It currently stands at R312 billion, while the revised deficit for the full fiscal year is projected at R347 billion – a substantial increase from the R247 billion deficit in 2022/23.

Bishop added that gross loan debt is projected at 74.7% of GDP for 2023/24, significantly up from 70.9% in 2022/23.

It is also far higher than the 72.2% of GDP initially projected for 2023/24.

In addition to these challenges, the World Bank said constrained rail and port capacity are expected to weigh on South Africa’s export performance.