South Africa's economic growth outlook: What to expect in the coming months

Although the economy doesn’t look very bright at the moment, with forecasts having recently been trimmed on the back of US President Donald Trump’s pending 30% in tariffs, all may not be doom and gloom.

The South African Reserve Bank’s (SARB’s) Composite Business Cycle Indicators may show that the next six to 12 months don't look that positive, the current position and that of the most recent economic situation, gained.

Commenting on the latest indicator, Investec chief economist Annabel Bishop said that she anticipates a better gross domestic product (GDP) growth rate in the second quarter than the first three months of the year.

However, Bishop does not expect to see especially strong growth in the second quarter.

In the first quarter, GDP came in at a mere 0.1%, with the fact that it gained at all being due to agriculture. This figure surpassed economists’ expectations. The economy grew 0.6% last year.

Investec Wealth & Investment’s data shows that growth has averaged 4.5% since 2010, and the unemployment rate would be significantly lower. 

SARB’s leading business indicator for South Africa, which gives a sense of where the economy might be headed in the next six to 12 months, dropped by 1.3% in May 2025. This was mainly because fewer residential building plans were approved, and manufacturers received fewer new domestic orders.

Out of the ten measures used to calculate this indicator, nine went down. The only one that improved was the price South Africa earned for its export commodities, measured in US dollars.

Meanwhile, the indicator that tracks how the economy is currently doing, rose by 0.7% in April 2025. This was thanks to growth in factory production and an increase in the real value of sales in wholesale, retail and car trade sectors.

The lagging indicator, which looks at changes that happen after the economy has already shifted, also increased slightly by 0.3% in April.

Bishop also cited the BankservAfrica Economic Transactions Index (BETI), which may have fallen 0.9% in April when compared with January’s number but lifted by 0.1% for the first two months of the second quarter when compared to the same period in the last quarter.

For the second three months of the year overall, the BETI is up by 0.6%, with Investec’s GDP forecast for the quarter also at 0.6% quarter-on-quarter, seasonally adjusted, although historically there is not a direct correlation.

South Africa’s economy could grow as much as 0.8% in the second quarter of 2025 after contracting in the first three months of the year, Old Mutual chief economist Johann Els has previously said.

SARB has downgraded its 2025 GDP growth forecast from 1.7% to 1.2%, while the International Monetary Fund projects just 1% growth for the year.

IOL