South Africa's economy slowed for the third year in 2024 but avoided a recession, aided by a strong agricultural rebound. While the government sees signs of recovery, critics warn of stagnation and rising poverty. A VAT hike dispute has delayed the budget, with inflation rising to 3.2% in January.

South Africa’s economy slowed for the third consecutive year in 2024 but managed to avoid a recession in the final quarter, thanks to a recovery in the agricultural sector following a drought, according to official data released on Tuesday. The country’s Gross Domestic Product (GDP) grew by 0.6% in 2024, a slight decline from the 0.7% growth recorded in 2023, as reported by the national statistics agency, StatsSA. This marks the third straight year of economic deceleration since South Africa rebounded from the COVID-19 pandemic in 2021.

Despite the prolonged slowdown, South Africa narrowly avoided entering a technical recession, which is defined as two consecutive quarters of economic contraction. The economy recorded a 0.6% expansion between October and December, following a 0.1% contraction in the third quarter. The government responded to the latest figures with optimism, describing the growth as encouraging and a sign of a much-needed recovery.

The fourth-quarter economic expansion was primarily driven by the agriculture, finance, and trade sectors. The agricultural sector, in particular, saw substantial growth, expanding by 17.2% in the final quarter and contributing 0.4 percentage points to the overall GDP increase. This marked a strong rebound from the third quarter when agricultural production had declined sharply due to drought conditions that significantly affected output.

However, the economic data was met with criticism from the centre-right Democratic Alliance (DA) party, which is part of the coalition government. The DA described the latest figures as evidence of a stagnant economy and warned that unless immediate action was taken, the country would continue its downward economic trajectory. The party also raised concerns about the financial well-being of citizens, stating that South Africans were getting poorer year after year.

The DA has been engaged in a dispute with the ruling African National Congress (ANC) over a proposed increase in the value-added tax (VAT) to fund the national budget. This disagreement caused a delay in the unveiling of the budget last month, though a new date has now been scheduled for March 12. Meanwhile, South Africa’s inflation rate rose to 3.2% in January, adding to economic pressures and further highlighting the challenges faced by the country’s economy.