South Africa’s economy is poised for a better year in 2025, with experts projecting over 1% growth, lower interest rates, and renewed investment opportunities.
However, caution remains as external and domestic challenges loom large.
From the promise of political reform to lingering concerns over unemployment, here’s what the experts have to say.
SA economy: Signs of recovery
Economists are optimistic about economic growth, driven by political stability and operational improvements.
Professor Raymond Parsons of North West University Business School tells City Press that 2025 will offer “great opportunities and risks.”
Economic growth and confidence
Professor Parsons highlights the cessation of load shedding and improved energy security as key contributors to a brighter outlook.
This shift has bolstered both business and consumer confidence, supported by surveys showing increasing optimism.
“SA’s future economic performance hinges on mainly domestic policy decisions that maintain a macro environment that is ultimately efficient, stable and consistent for investment and job-rich growth.”
More unemployment?
Meanwhile, independent economist Duma Gqubule is not as optimistic. He paints a “more of the same” scenario for next year.
“Nothing will change much. […] The economy will grow by 1% – lower than the National Treasury projection.”
Gqubule adds that unemployment figures “will increase and about 500 000 more people will have no jobs.”
Interest Rates and Inflation
Interest rates are expected to decline further, offering relief to consumers and businesses.
According to Parsons, the South African Reserve Bank (SARB) has already implemented cuts in 2024, with projections indicating a reduction of 75 basis points in 2025.
“This suggests three reductions of 25 basis points each in the first half of next year, thus easing borrowing costs for business and consumers respectively.”
SA economy: The challenges
While the economic outlook is generally positive, significant hurdles remain.
Infrastructure and utilities
Parsons says the recent economic growth is thanks to the “cessation of Eskom load shedding and the promise of greater energy security.”
That said, Eskom’s ongoing challenges – including tariff applications for 2025 – could still pose a risk to the cost of doing business.
Water supply issues also require urgent attention.
Global risks
The global landscape could also dampen South Africa’s prospects, particularly the impact of US policies under Donald Trump’s new administration.
As Gqubule said, there will likely be a tug-of-war between Trump and the Federal Reserve.
Interest rates may not decrease as quickly, which could affect global economic stability, he adds.
Despite the challenges, 2025 offers South Africa a unique opportunity to build on recent progress.
