PWC: Business Confidence in South Africa Improves

South Africa in June established the GNU consisting of 10 political parties after the general elections which did not produce an outright winner.

In its latest version of the South Africa economic outlook report for 2024 released Monday, PwC said the Johannesburg Stock Exchange All Share Index gained 15.2 percent in the third quarter to reach new record highs on the back of growing optimism of what a more effective government could mean for the economy and company revenue.

Meanwhile, the rand, the South African currency, appreciated close to 17 units per U.S. dollar in late September to a level last seen early in 2023.

"The sentiment in global financial markets has been notably more favorable toward South Africa since the formation of the GNU which has continued to strongly drive economic reforms set in motion by the previous administration," said Lullu Krugel, PwC South Africa chief economist. "Asset appraisals have shown positive momentum in recent months on the back of growing optimism of what the multi-party government could mean for the economy. As such, the outlook for companies whose earnings are predominantly linked to the South African economy has improved significantly over the past several months."

The PwC report said government bond yields fell to the lowest level in three years and "domestic business activity and sentiment" show that expectations for business conditions in the short term are at the highest levels in several years.

The firm said it expects real gross domestic product growth of 0.8 percent for South Africa this year and 1.4 percent in 2025. It noted the improved economic outlook could help reduce expected revenue shortfall if a stronger economy generates more tax than expected during the remainder of the 2024/2025 fiscal year.

Furthermore, with the second phase of the government-business partnership launched earlier this month, the South African business community has pledged to work with the government to address some of its biggest economic challenges, such as electricity load-shedding or power cuts, and logistical bottlenecks.

"South African CEOs have recommitted to supporting the government in the next phase of our public-private partnership," said PwC Southern Africa CEO Shirley Machaba. "We will support the GNU in implementing the reforms needed to accelerate economic and employment growth towards a more prosperous South Africa."

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