Despite the third quarter gross domestic product (GDP) decline, Cabinet has welcomed the positive economic outlook by the International Monetary Fund (IMF) and rating agency Standard & Poor’s (S&P), as the impact of the implemented Operation Vulindlela coordinated reforms have started to bear fruit.
This is according to Minister in the Presidency Khumbudzo Ntshavheni, who briefed the media on the outcomes of the Cabinet meeting held on Wednesday, 4 December.
S&P revised South Africa’s outlook to “positive” from “stable” in November this year, citing plans for accelerated economic reforms by the new government of national unity and a pickup in private investments.
Ntshavheni said Cabinet noted the decline in GDP by 0.3% in the third quarter of 2024, with the largest decline of 28.8% recorded in the agriculture, forestry and fishing, which may indicate the impact of drought.
Statistics South Africa (Stats SA) has indicated that the severe drought in 2024 caused a 0.3% decline in the country’s GDP in the third quarter.
Meanwhile, S&P also upgraded Eskom’s long-term global-scale foreign and local currency ratings from stable to positive, which indicates the progress made by government in strengthening Eskom’s financial and operational foundation through the work of the National Energy Crisis Committee (NECOM), the Eskom Board and 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%," said Ntshavheni.
The Executive believes that the lower interest rate will continue to ease the burden on highly indebted consumers and mitigate the high cost of living, while also encouraging businesses to expand their operations to further stimulate economic activity.
Investment
Cabinet has welcomed the announcement by Saudi Arabia to invest R9.5 billion to build a platinum smelter and base metals refinery in the Waterberg in Limpopo.
“This new investment is a strong vote of confidence in our nation and builds on the first phase of our investment mobilisation drive under the sixth administration that saw our nation surpass its investment target by 26% to reach a total of R1.51 trillion in investment pledges,” said Ntshavheni.
The Minister said South Africa is now targeting R2 trillion in new investments over another five years between 2023 and 2028.
SAA
In addition, the Executive has commended South African Airways’ (SAA) strong performance, highlighting the airline’s significant progress towards financial sustainability.
“For the first time since 2012, the SAA has recorded a net profit of R252 million for the 2022/23 financial year, and group revenue increased from R2 billion to R5.7 billion.
“Remarkably, SAA achieved this milestone while operating with only six to eight aircraft across nine destinations at the beginning of the 2022/23 financial year,” Ntshavheni said, adding that the airline has since doubled its fleet, launched intercontinental routes, and increased its network to 16 destinations. – SAnews.gov.za
