South Africa probably avoided a recession last year, saved by strong consumer demand in the fourth quarter as the key mining and manufacturing sectors continued to struggle.

“Industry is basically stagnating,” said Jee-A van der Linde at Oxford Economics, while “the retail sector will probably provide some growth.” Retail sales expanded 2.1% in the quarter.

Consumer spending in the quarter received a boost from benign inflation, two 25 basis point interest-rate cuts in the second half of last year and pension fund members having early access to part of their retirement savings without penalties.

That momentum is expected to carry into 2025, together with a recovery in mining and manufacturing as logistical snarl-ups that have crimped the economy begin to ease, said Razia Khan, Standard Chartered chief economist for Africa and the Middle East.

The “2024 figures seem glaring because of the absence of this momentum. But progress is underway, albeit slowly,” she said.

Even so, economists in a separate Bloomberg survey only foresee the economy expanding 1.7% this year. Such an outcome is too low to dent one of the world’s highest unemployment and poverty rates, and much less than the 3% growth rate targeted by the governing coalition.

Crowding In

That goal hinges on attracting investment to help modernise the nation’s frayed infrastructure after years of neglect. Fixed investment in the past decade has fallen by an average of 1.3% a year, contributing to economic growth averaging less than 1% annually over the period.

But the private sector could be put off by threats from US President Donald Trump’s protectionist measures, as well as tensions within the so-called government of national unity.

“With Trump back, businesses across the spectrum, it’s just too much uncertainty for them to really commit,” Van der Linde said. “There could have been a temporary increase in investment during the fourth quarter, during the euphoria of GNU, but from the first half of this year it goes down again due to uncertainty.”