South Africa: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for South Africa

The 2024 Article IV Consultation discusses that South Africa’s economy has continued to face challenges in recent years. Government’s fresh mandate represents an opportunity to pursue ambitious reforms to safeguard macroeconomic stability and address these challenges, placing the economy on a path toward higher, more inclusive, and greener growth. Real output growth, estimated at 0.8 percent in 2024, is expected to accelerate to 1.5 percent in 2025 on the back of improved electricity generation, monetary policy easing, and a return of investor and consumer confidence post elections. Growth is projected to reach 1.8 percent by the end of the decade, supported by ongoing electricity and logistics reforms, while inflation stabilizes around the midpoint of the central bank’s target range. Ongoing electricity and logistics reforms aiming at alleviating critical supply constraints are welcome and should be ambitiously implemented. Meeting South Africa’s climate goals requires further efforts to increase effective carbon taxation and accelerate the rollout of renewable energy. Adequate communication, targeted support to vulnerable groups to mitigate near-term costs, and strengthened institutions, are key to increase the social acceptability of reforms.