The Minister of Finance, Mr Enoch Godongwana briefing members of the media before presentation of the Devision of Revenue Bill (Budget Speech) to Members of the National Assembly.
Image: Jairus Mmutle/GCIS
The National Treasury on Wednesday forecast that South Africa's real economic growth will surge to 1.9% in 2025 on the back of the continued implementation of structural reforms and rising investor confidence.
This follows lower-than-expected growth in 2024 due to unanticipated weaknesses in agriculture and transport during the third quarter.
Delivering the 2025 Budget Review in Parliament on Wednesday, Finance Minister Enoch Godongwana maintained the government’s focus on growing the economy, stabilising the public finances, and supporting low-income and vulnerable households.
However, Godongwana said a bigger, faster growing economy, and the larger fiscal resources that comes with it, would give the country more fiscal room to meet more of its developmental goals.
"But the truth is that our economy has stagnated for over a decade. In that time, GDP growth has averaged less than 2%, far below the level required to meet our expanding list of needs. In 2024, the economy grew by only 0.6%. Over the medium term, GDP growth is projected to average 1.8%," he said.
"To meet our goals of redistribution, redress and structural transformation, the economy needs to grow much faster and in an inclusive manner. This is the central objective of the current administration."
Godongwana said the Treasury's strategy to achieve faster growth remained anchored on the following four pillars, which was maintaining macroeconomic stability, implementing structural reforms, improving state capability, and accelerating infrastructure investment.
He said maintaining macroeconomic stability, inclusive of prudent fiscal policy, promoted stable prices, lowered interest rates and enhances the country’s resilience to external shocks, as well as creating a conducive environment for investment.
Budget 2025
Image: Graphic
"Implementing structural reforms removes impediments to growth and creates a solid foundation for a high and sustained economic growth," he said.
"It was out of the realisation that economic growth and fiscal stability are mutually reinforcing, that Operation Vulindlela was formed as a joint initiative between the Treasury and the Presidency, to fast track the implementation of structural reforms."
The 2025 Budget proposed investments for faster economic growth, focusing on electricity, rail, water and transportation infrastructure projects."
Although economic performance was not strong in 2024, the outlook appears to be better from 2025 onwards.
"Over the next three years, the economy is projected to grow by 1.8% annually, and successful implementation of reforms could lead to higher growth," said the National Treasury in the Budget documents.
Treasury said the government’s economic growth strategy will support higher living standards in the context of global uncertainty, trade disputes and financial market vulnerabilities.
It said the strategy focused on maintaining macroeconomic stability to reduce living costs and grow investment, executing reforms to promote a more dynamic economy, building State capability in core functions and supporting growth-enhancing public infrastructure investment.
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