South Africa needs two consecutive years of 2% economic growth to attract long-term value investors, and 2025 is projected to be the first of these pivotal years, according to a senior analyst from JPMorgan, BusinessDay reports.
JPMorgan's senior equity strategist, David Aserkoff, made this statement while addressing South African cabinet ministers and business leaders from both the UK and South Africa at the London Stock Exchange.
This event followed the opening bell ceremony, led by Deputy President Paul Mashatile, who is part of a government roadshow aimed at attracting international investment.
The South African delegation, which includes five cabinet ministers and four deputy ministers, represents the largest visit to the UK in years.
In addition to meeting UK government officials, the delegation will engage with key financial institutions such as JPMorgan, Citibank, Investec, and Goldman Sachs to discuss opportunities with corporate clients and investors.
Following the recent election and the establishment of a Government of National Unity (GNU), South Africa has become a focal point for emerging markets, driving the rand’s strength, reducing bond yields by over 150 basis points, and boosting the MSCI South Africa index by 23%, significantly outperforming the broader emerging markets index.
The general retail index also saw impressive growth, surging by 35%.
South Africa’s economy showed modest growth in the second quarter of 2024, thanks in part to the absence of load-shedding.
Data from Statistics South Africa showed that GDP grew by 0.4% during this period, following a flat performance in the first quarter of the year, which was still affected by power disruptions. Stats SA also revised the first quarter figure slightly upward after initially reporting a 0.1% contraction.
Investec chief economist Annabel Bishop said this week that data from Q3 2024 and earlier this year supports Investec's forecast for South Africa's economic growth at 1.0% for the year.
Investec expects GDP growth to accelerate in 2025, reaching 1.7%.
In contrast, the IMF projects South Africa’s growth rate to hit 1.3% in 2024, with their forecast for 2026 standing at 1.4%, notably below Investec’s prediction of 2.0%.
“At an average of 1.9% seen over the next two years, Investec envisages faster recovery for South Africa, as structural constraints are worked down more quickly, particularly with private sector participation accelerating in the port and rail sectors,” said Bishop.
“The latter years of the five-year forecast period are likely to come out at 2.5% (2027), 2.8% (2028) and 3.1% (2029), with economic growth able to lift further thereafter, leading to higher income per capita and living standard outcomes.”
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