SA GDP grows by 0.6% in Q4 2024 as agricultural sector rebounds with 17.1% surge

After reaping a sorrowful harvest in the third quarter (Q3) of last year, when its dismal performance tipped South Africa’s economy into a contraction, the agricultural sector sowed the seeds of growth in Q4.

Data released on Tuesday, 4 March by Statistics South Africa showed that South Africa’s economy grew by 0.6% in Q4 on a quarter-on-quarter, seasonally adjusted basis after shrinking by a revised 0.1% in Q3. It adds up to growth of 0.6% for all of 2024, compared to 2023 when the annual growth rate was 0.7%.

This was largely because of the agricultural sector, which posted a 17.1% quarterly surge in output after a steep decrease in Q3 that was revised to 19.7% from almost 29% in the initial estimate.

“This expansion is mainly due to the better performance of some field crops, livestock, and the horticulture subsector (mainly fruits). In essence, the late deliveries of some field crops also helped because the season was late,” said Wandile Sihlobo, chief economist at the Agricultural Business Chamber of SA, in a commentary.

Economists have raised concerns about the volatility of the agricultural production data, which can sharply sway a quarter depending on the timing of grain deliveries, among other things.

Agriculture helped to prevent South Africa’s economy from sliding into a recession, which is defined as two straight quarters of economic contraction. But its Q4 performance did not prevent the sector from contracting by 8% in 2024 compared to 2023, though a recovery is seen this year.

Other sectors look glum, including manufacturing, which has not had the jolt that one might have expected from the return last year of reliable electricity with the end of the rolling power cuts. Its output declined by 0.1% in Q4.

“This data is still reflecting a very weak economy. Seven out of the 10 economic sectors contracted in the fourth quarter relative to the third quarter of last year,” said Dr Elna Moolman, Standard Bank group head of South Africa Macroeconomic Research.

“An even bigger concern is the fact that for many sectors, real GDP was still lower in the fourth quarter of last year than before Covid.”

Moolman pointedly noted that the construction sector’s output was 25% lower than it was in Q4 2019. This is deeply worrying as construction is labour intensive and a key measurement of confidence, or the lack thereof, in the economy. You don’t build stuff if you are not confident about future business conditions.

The bottom line is that South Africa’s economy remains stuck in the jaws of a low-growth trap, unable to expand at a pace that can rise to the monumental challenge of addressing the terrible trifecta of poverty, unemployment and inequality. DM