World Bank sees modest economic growth for SA, warns recovery remains weak
The World Bank has given South Africa a modest vote of confidence, saying the economy is growing again but warning that the recovery remains weak.
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The World Bank has given South Africa a modest vote of confidence, saying the economy is growing again but warning that the recovery remains weak.
According to the latest World Bank Global Economic Prospects report, South Africa’s economy expanded by an estimated 1.3% in 2025, supported by a more reliable electricity supply, a strong agricultural harvest and improving business confidence.
"In South Africa, growth strengthened in 2025 to 1.3%, supported by more reliable electricity supply, a bumper agricultural harvest, and a pickup in business confidence toward year-end. Fiscal consolidation efforts and a lower inflation target further bolstered investor sentiment," the report noted.
The World Bank predicts that growth will edge up only slightly over the next two years, reaching about 1.5% by 2027.
"Growth in South Africa is projected to increase to 1.4% in 2026 and 1.5% in 2027. Continued reform momentum — particularly in energy and logistics — alongside rising public investment is expected to crowd in private investment and support medium-term growth prospects," the report stated.
"Private consumption and investment will remain the main growth drivers, aided by efforts to improve public-expenditure efficiency and ease supply-side constraints."
However, the report cautions that these gains remain modest, both for South Africa and across Sub-Saharan Africa, adding that growth at these levels remains well below what is needed to absorb new entrants into the labour market, reduce unemployment or ease widespread poverty.
"Despite modest gains, growth rates remain too low to generate enough jobs or significantly reduce poverty, leaving the economy vulnerable to external shocks and domestic constraints."
The report also notes that South Africa and other African economies face external trade risks, including the expiration of the United States’ African Growth and Opportunity Act (AGOA) in late 2025, unless it is extended.
IOL previously reported that the US House of Representatives has approved a three-year extension of the African Growth and Opportunity Act (AGOA), and South Africa has welcomed the decision.
Minister of Trade, Industry and Competition Park Tau said the renewal “provides the necessary relief to companies in the context of the tariffs implemented by the United States” and ensures “certainty and predictability for African and American businesses that rely on the programme”.
However, while Tau has welcomed the extension, there’s still uncertainty around South Africa’s participation in the programme, because the bill now goes to the US Senate for approval, and some lawmakers have raised concerns about the country's foreign policy and diplomatic relationship with Washington.
mthobisi.nozulela@iol.co.za
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