Economic Market Report - March 2024

Smart Money Moves
9 April 2024
5 min read

South African financial markets are facing ongoing pressure, with signs indicating a move towards stagflation. Economic growth is nearly stagnant, flirting with recession, while inflation remains persistently high. This trend mirrors global patterns, where inflation levels are higher than anticipated, leading developed nations to maintain their nominal interest rates. The US Federal Reserve plans to keep its bank rate steady through March and May, with changes likely later in the year.

Global Economic Prospects forecasts slower growth for most economies in 2024 and 2025 compared to pre-COVID-19 levels. Growth is expected to reach 2.4 percent in 2024, rising slightly to 2.7 percent in 2025, significantly below the 3.1 percent average of the 2010s. Per-capita investment growth is forecasted at just 3.7 percent for 2023 and 2024, less than half the average of the previous two decades. Without intervention, global growth will likely remain below its potential throughout the rest of the 2020s.

South Africa

South Africa's economic growth outlook for 2024 and 2025 remains bleak, with low prospects. According to STATSSA's recent release of 2023 economic growth data, the quarter-on-quarter growth rate in Q4 2023 increased by 0.1%, contrasting with the previous quarter's 0.2% decline and falling short of the expected 0.3% growth. Six out of ten industries contributed to this growth, led by a 2.9% expansion in the transport sector. Mining activity rebounded by 2.4%, compared to a -1% decline in Q3, and manufacturing showed a slight improvement of 0.2%, partly due to reduced power cuts. However, agriculture (-9.7%) and trade (-2.9%) suffered significant declines. Overall, South Africa's economy expanded by only 0.6% in 2023, a notable drop from the 1.9% growth seen in the previous year.

Figure 1: South Africa’s economic growth rate remains under pressure.

In December 2023, retail trade in South Africa rose by 2.7% compared to the same period the previous year, surpassing market expectations of a 0.7% decline, and following a revised 1% decrease in the prior month. Meanwhile, manufacturing production saw a year-on-year increase of 0.7% in December, marking the slowest growth in three months, compared to a revised 2.5% rise in November, which was in line with forecasts.


The US economy began 2024 on a strong note, with positive trends in business activity, job markets, sentiment, and inflation. Despite challenges like rising consumer debt and higher interest rates, GDP growth for Q4 surpassed expectations at 3.3%, the highest among G7 nations. Although interest rates remain elevated, a recession doesn't seem imminent. GDP growth is forecasted to hover around 2.0% until 2028.

Inflation in January 2024 slightly dipped to 3.1%, slightly higher than anticipated, with core inflation holding steady at 3.9%, defying expectations of a decrease. Though inflation is moderating, it hasn't yet hit the target level. Federal Reserve officials may consider tightening monetary policy further to achieve this. Meanwhile, unemployment held steady at 3.7%, with over 300,000 new jobs added in January.

Europe and the UK

In Europe, GDP growth is predicted to improve to 1.3% in 2024, which is still below its potential. This forecast marks a slight downward revision of 0.1 percentage point from previous estimates. It's anticipated to pick up further momentum, reaching 1.7% in 2025. For the euro area, GDP growth is expected to be slightly lower, at 1.2% in 2024 and 1.6% in 2025. In the UK, annual average growth of 1.9% is projected between 2024 and 2027, driven by lower inflation, a robust labour market, and the possibility of interest rate cuts, laying the groundwork for a return to historical growth levels.

Regarding inflation, headline CPI is forecasted to reach the European Central Bank's (ECB) and the Bank of England's 2% target during the year, though some volatility is expected. With GDP growth expected to remain stagnant, both the ECB and BoE are anticipated to cut interest rates starting from the second quarter of 2024, with each expected to reduce rates by 75 basis points, bringing them to 3.0% and 3.75%, respectively.

Emerging Markets (EM)

Global Economic Prospects predicts that growth in Emerging Market and Developing Economies (EMDEs) will hold steady at around 3.9% annually for the next three years. Although there will be a slowdown in China, other regions are expected to see improved domestic demand due to increased international trade. However, the recovery from the pandemic-induced recession of 2020 is anticipated to be sluggish compared to previous economic crises. In East Asia and the Pacific (EAP), economic activity is expected to decline due to issues in China's property sector and other structural challenges. Latin America and the Caribbean (LAC) will see only a slight growth increase, while the Middle East and North Africa (MNA) and Sub-Saharan Africa (SSA) are poised for stronger growth, particularly due to recoveries in oil-exporting nations.

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