South Africa Economic Outlook 2024

February 2024


PwC South Africa published its Budget 2024 predictions on February 13. The annual fiscal budget sets out the government’s medium-term spending plans for taxpayer money. This edition of the South Africa Economic Outlook takes a closer look at selected economic and tax topics ahead of the budget speech on February 21.

View of a forest.

A key observation in this economic outlook report is that PwC expects the finance minister to announce an increase in taxes towards raising more revenue for the 2024/2025 fiscal year. The Medium Term Budget Policy Statement (MTBPS) 2023 noted that the National Treasury would need to lift (unspecified) taxes in 2024/2025 towards raising an additional R15bn in revenues. 

By our estimates, to raise an additional R15bn would require increasing Personal Income Tax (PIT) rates by 0.5 percentage points across all tax bands, or one percentage point on those earning more than R500,000 a year. Alternatively, the National Treasury could look at increasing the Value-Added Tax (VAT) rate by 0.5 percentage points to 15.5%.

Overall, we estimate that the 2023/2024 fiscal year will see a budget deficit equal to 5.1% of GDP. Looking ahead at the 2024/2025 fiscal year, the Medium-Term Budget Policy Statement (MTBPS) 2023 pencilled in a deficit equal to 4.6% of GDP, while we project a figure equal to 4.9% of GDP. Our number is larger (more conservative) due to a more subdued outlook on economic growth. 

In many emerging markets like South Africa, fiscal space will be constrained in 2024 due to weak revenues and rising debt-servicing costs. Elevated debt, tight financial conditions and tepid economic growth is putting pressure on fiscal sustainability while increasing vulnerability to external financial shocks. The fiscal situation is also detracting from other government work as policymakers across many countries face trade-offs between maintaining fiscal stability and other priorities. These include investment in reaching Sustainable Development Goals (SDGs).

In this edition: 

Preview: Budget 2024

Will tax increases be announced for 2024/2025?

The finance minister has acknowledged in recent months that increasing taxes in the current economic environment would be difficult. The key question is what form the tax increases will take, with a tough decision that needs to be made between PIT and VAT. Increasing either of these will draw the ire of hard-working South Africans. PwC is of the opinion that a VAT increase, rather than a PIT increase, can be justified. An increase in VAT in order to fund social spending, particularly in the form of a means tested grant, is highly progressive in aggregate. Another strategy to improve tax revenues is by increasing tax compliance.

Key elements of this report include: 

  • Global fiscal risk: Strain on public finances are detracting from SDGs, industrial and climate policies.

  • Local tax trends: PIT collections better than forecast, offset by lower import VAT and customs duties.

  • Budget deficit outlook: Tax increases likely in 2024/2025 amidst a continued large fiscal shortfall.

  • Increasing tax compliance: PwC survey shows it has become easier to comply with SARS tax obligations.

  • How PwC assists our clients with tax compliance and measuring their total tax impact.

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South Africa Economic Outlook 2024 | February

PwC's Annual Tax and Economic update 2023/2024

Reflect on your business in the context of the current tax and economic landscape, presented by PwC, and consider necessary action.


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Contact us

Lullu Krugel

Lullu Krugel

PwC Africa ESG Platform Leader, Strategy& and Chief Economist, Strategy& South Africa

Tel: +27 (0) 82 708 2330