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South African Construction Industry Forecast Report September 2024

The global economic outlook since the last review presents a mixed picture, with moderate growth expected in the Euro Area but weaker projections for the US and China in 2025, which may affect South Africa's trade. Inflation is under control, and a weaker dollar due to an anticipated US Federal Reserve interest rate cut could benefit emerging markets. Investor sentiment has improved, likely due to the establishment of a new Government of National Unity (GNU) in July 2024, which is expected to enhance economic stability, though challenges like infrastructure collapse and unresolved logistical issues persist.

The South African government appears committed to accelerating structural reforms, particularly through partnerships with the private sector, with the growing water crisis now surpassing energy concerns. Despite increased transport allocations in the 2024 Budget, investment in social infrastructure remains insufficient, causing public dissatisfaction. Local government capacity, especially in project execution and financial management, needs urgent improvement to ensure effective infrastructure spending. Although there are efforts to "unblock" stalled projects, meaningful progress is still lacking.

The economic outlook has improved slightly, with expectations of structural reform acceleration and more stable inflation and interest rates. However, significant risks remain, particularly in implementing reforms and restoring fiscal health, which could limit infrastructure funding. South Africa is focused on exiting grey status by January 2025 and addressing its credit downgrade to recover infrastructure spending. The upcoming Medium-Term Budget Policy Statement in October 2024 will be crucial in determining if these plans will be effectively realized....

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