GNU boon for investment

Expert sees stronger rebound in economic growth in second quarter.

- Ina Opperman

The stable supply of electricity and the government of national unity's apparent support for continued reform in the critical areas of infrastructure are likely to boost private confidence and investment in the longterm, an Absa economist says.

A stronger rebound in economic growth is expected for the second quarter.

Presenting Absa's quarterly perspectives for the third quarter, Miyelani Maluleke, senior economist and head of South Africa macroeconomics research at Absa, said the bank had lifted its 2024 real gross domestic product growth forecast to 1.1% by 0.2 percentage points and saw 2025 growth at 2.0% (+0.3 percentage points).

"Early perceptions of the GNU suggest that the new administration will continue on the reforms path championed by the Operation Vulindlela initiative.

"Given the uncertainty regarding governance and policy before the elections, we believe that the GNU outcome and its support for macro stability and continued reform should bolster confidence." However, he said, consumers would remain under pressure, but financial strain would ease.

"The combination of below-inflation wage growth and high borrowing costs have weighed on real spending growth and added to consumer debt distress.

"While we believe that financial pressure on consumers will persist for some time, the strain should begin to ebb.