South African economy narrowly avoids recession ahead of 2024 elections

The South African economy grew 0.1 percent in the fourth quarter of 2023, narrowly avoiding a recession that could have hurt the ruling African National Congress (ANC) ahead of May elections, official figures showed on Tuesday.

The key mining industry recorded a 2.4 percent increase in output helped by stronger production of platinum group metals, chromium ore, coal and diamonds, the national statistics agency StatsSA said.

Alongside a 2.9 percent expansion in the transport, storage and communication sector, this helped reverse a 0.2 percent contraction recorded in the previous three months.

But StatsSA described economic growth as “muted” with the marginal 0.1 percent increase taking the annual rate for 2023 to a meagre 0.6 percent. In 2022 GDP had grown by 1.9 percent.

South Africa will hold a legislative election on May 29, amid high unemployment and widespread disillusionment with the ANC that has been in power since 1994.

Agriculture, a backbone of South Africa’s economy, shrunk for the first time since 2019, recording a 12.2 percent drop in output last year.

“This is the biggest annual fall in agriculture production since 1995,” StatsSA said.

The poultry and livestock industry, which accounts for almost half of the sector’s value, has been badly hit by outbreaks of bird flu, foot and mouth disease and African swine fever, said Kulani Siweya, chief economist at farm industry group AgriSA.

TOO LATE FOR THE ANC?

This added to a prolonged energy crisis resulting in daily power blackouts and transport challenges that have harmed the economy at large, he said.

Troubles at state-owned rail and ports firm Transnet, hobbled by graft scandals, theft and maintenance issues, resulted in a massive gridlock at container ports late last year.

Nedbank said the economy should fare “slightly better in 2024”, but the recovery was expected to start only in the second half of the year.

That might prove too late for the ANC.

Polls suggest the party could lose its parliamentary majority in May for the first time since the advent of democracy. That would force it to find a coalition partner to remain in power.

“Our economy is at a standstill, and South Africans are becoming poorer,” said shadow finance minister Dion George, of the Democratic Alliance, the leading opposition party.

“With each passing day, the irreparable damage to our economy and international standing because of the ANC’s governance failure grows more evident. Its tenure has been catastrophic.”

By Garrin Lambley © Agence France-Presse

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