Chart of the Week

Last week Statistics South Africa presented the Q4 2024 GDP data for South Africa, revealing that the South African economy grew by just 0.6% (in real terms) in 2024. This is its lowest growth rate since the large contraction in 2020 (-6.3%). Over the past ten years, South Africa’s real GDP growth has only equalled or exceeded its population growth levels (about 1.3% p.a.) twice: in 2015 (1.3% growth) and its initial post-COVID recovery in 2022 (4.9%). South Africa’s real GDP in 2024 was about the same as it was in 2018. The Namibia Statistics Agency is expected to publish Namibia’s Q4 2024 (and thus also full-year 2024) GDP data on 20 March 2024. We anticipate real GDP growth of 3.4% for Namibia in 2024, which would mark a fourth consecutive year that Namibia has seen real GDP growth above population growth (approximately 3.0% p.a.). After stagnating from 2015 – 2019 and a major contraction in 2020, the Namibian economy has shown decent growth over the last few years – and we believe there are good prospects for this to continue (should there be no abrupt policy changes). Although the Namibian economy is just a fraction of South Africa’s (for 2024, about 3.4%), on a relative basis the Namibian economy has performed much better over the last 30 years – even with Namibia’s stagnation during the 2010s. As seen in the chart, when indexed back to 1993 (just after independence for Namibia and just before South Africa’s constitutional democracy), both countries performed similarly. Namibia and South Africa saw nearly like-for-like economic growth from 1993 until 2001, whereafter Namibia started posting much higher economic growth – outperforming until 2015. Even with the stagnation, South Africa’s relatively weak growth over the last 15 years means it has not closed the (relative) gap, and subsequent to the COVID-19 pandemic, the gap has begun widening again. While there are many criticisms of real GDP (whether in absolute terms or per capita), this measure serves an important function and provides an important indication of the state of a country’s economy and, to some extent, her people. If an economy is not growing, it is unlikely to be creating (net) jobs, seeing wage adjustments, or see sufficient growth in public sector revenues for continued spending on infrastructure and social safety nets. At a per capita level, GDP is a great measure of living standards – especially for developing countries. Higher GDP per capita means that, generally, the population is getting wealthier as more value addition takes place even as the population grows. Many important socioeconomic indicators are highly correlated with GDP per capita, such as calorie consumption, life expectancy, educational attainments, incomes, and energy usage. Higher GDP growth, especially above population growth levels (or ‘per capita’), generally means that an economy is creating more jobs and paying better wages – seeing absolute poverty fall while creating a larger and wider tax base for the state. Improved revenues for a government, particularly in a developing country such as Namibia, means that there is more money to spend on improving livings standards – whether access to safe (piped) drinking water, access to quality healthcare, access to quality education, or access to electricity (amongst others). This is under the assumption that fiscal expenditure is responsible and targeted at a government’s core functions – something which is often an issue for developing countries. Based on our forecasts for Namibia and using South Africa’s Treasury forecasts for SA, we expect the relative gap in the two economies to continue widening over the foreseeable future.

Chart of the Week

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Allgemeine Zeitung 2025-06-04

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Chart of the Week

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Allgemeine Zeitung 2025-06-04

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