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Suddenly things are looking a lot brighter for South Africa — it celebrated 300 days without load shedding on Tuesday, and Transnet is ushering in a new era of competition on its rail network.
A report out this week by Capital Economics says GDP growth is likely to exceed 2,3 percent this year, underpinned by the mining and retail sectors.
This is well above National Treasury’s 1,7 percent forecast for 2025, and the International Monetary Fund’s 1.5 percent projection for the year. Others have put the expected growth at 1.5-2 percent for 2025.
What’s sparked this upward revision in GDP growth are robust retail sales, up 7,7 percent for the year to November last year, and mining revenues, which surged 4 percent in the three months to November 2024 compared to the previous three months.
Manufacturing was the weak link in this otherwise rosy picture, contracting 0.2 percent over the three months to November.
The turnaround at Eskom and improved performance at Transnet — two critical brakes on growth for the last decade — have changed the economic outlook for the coming year.
“We think the SA Reserve Bank (Sarb) has scope to continue easing monetary policy to support growth. The lower-than-expected inflation reading for December supports our view that the Sarb will lower its repo rate by 150 basis points to 6.25 percent by year-end,” says Capital Economics.
Lower interest rates of this magnitude could put more than R20 billion a year into the pockets of home owners, with much of that going to the retail sector. — Moneyweb.
Online Reporter