SOUTH Africa has seen a marked boost in business confidence following the formation of its Government of National Unity (GNU), according to a recent report by consulting firm PricewaterhouseCoopers (PwC). Established in June, the GNU, a coalition of ten political parties, was formed after the general elections failed to yield a clear winner. This multi-party government has brought renewed optimism to South Africa’s economic landscape, driving up investor confidence and business sentiment.
In its latest South Africa Economic Outlook report for 2024, released Monday, PwC highlighted the significant gains in the Johannesburg Stock Exchange (JSE) All Share Index, which rose by 15.2 percent in the third quarter, reaching record highs. According to PwC, this growth reflects increasing market optimism about the GNU’s potential to introduce effective economic reforms.
Financial markets respond positively
Alongside the stock market rally, the South African rand strengthened to nearly 17 units per US dollar in September, its highest level since early 2023. PwC South Africa’s chief economist, Lullu Krugel, commented on the improved sentiment: ‘The sentiment in global financial markets has been notably more favourable toward South Africa since the formation of the GNU, which has continued to drive economic reforms set in motion by the previous administration. Asset appraisals have shown positive momentum in recent months, spurred by the growing optimism around the multi-party government’s impact on the economy.’
The report also noted that government bond yields have dropped to their lowest level in three years, reflecting growing confidence in South Africa’s fiscal health. Additionally, PwC highlighted that domestic business activity and short-term business sentiment have reached their highest levels in recent years.
GDP growth and economic partnership
PwC forecasts modest GDP growth of 0.8 percent for South Africa in 2024, rising to 1.4 percent in 2025. The firm suggested that an improving economy could help reduce the anticipated revenue shortfall if stronger growth leads to higher tax revenue during the 2024/2025 fiscal year.
The GNU’s partnership with the business community, which entered its second phase earlier this month, has been instrumental in addressing key challenges, such as power shortages and logistical issues. South African CEOs have pledged to collaborate with the government on reform initiatives aimed at boosting economic growth and job creation. ‘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.’
With the unity government’s formation, business confidence in South Africa has reached new highs, setting the stage for continued economic recovery and structural reforms.
