South Africa looks set for much better growth in 2025 thanks to increased spending and investment, according to analysts at Absa, though a cooling of relations with the US may dim the outlook.<\/p>\n\n\n\n
Africa\u2019s most industrialized economy could expand by 2.1% this year, analysts at the Johannesburg-based lender said on Tuesday. That compares with the 1.7% expansion forecast by the central bank, up from 0.7% in 2024.<\/p>\n\n\n\n
\u201cGrowth should be a lot better this year,\u201d Absa economist Miyelani Maluleke told a media round table. Milder inflation and lower borrowing costs are boosting income, he said, while investment should rebound from the depressed levels of recent years. \u201cCyclical support factors and a stronger consumer environment are positive.\u201d<\/p>\n\n\n\n
South Africa\u2019s economy has grown by less than 1% on average for the last decade, handicapped by mismanagement and corruption at state-run entities that snarled vital infrastructure and caused frequent power cuts.<\/p>\n\n\n\n
Load-shedding, as electricity outages are locally known, has decreased sharply in the past 12 months and the formation of a broad coalition government after the May elections boosted confidence, though that\u2019s recently taken some strain.<\/p>\n\n\n\n
An index of consumer sentiment fell to -20 in the three months through March from -6 in the previous quarter, FirstRand\u2019s First National Bank said separately on Tuesday, citing worries about higher taxes and US relations. It was the lowest level since the second quarter of 2023.<\/p>\n\n\n\n
US President Donald Trump has halted all federal funding to South Africa over false claims that the government is confiscating land. The nation hasn\u2019t seized any private land since the end of apartheid in 1994.<\/p>\n\n\n\n
The spat has fanned concern South Africa could lose preferential access to the US market through the African Growth and Opportunities Act, which expires in September.<\/p>\n\n\n\n
Absa estimates that excluding South Africa from AGOA would only have a limited direct impact, but the longer-term implications could be more serious if other trade tariffs were increased or foreign direct investment was hurt.<\/p>\n\n\n\n
Domestically, the shine has come off the so-called government of national unity after its first budget was rejected by key coalition partners, who objected to a planned increase in value-added tax. A subsequent budget proposed a scaled-back VAT hike and negotiations are continuing.<\/p>\n\n\n\n
While Absa sees positive momentum for the growth story, relations with Washington and potential domestic political strains that have surfaced with the budget are clearly risks.<\/p>\n\n\n\n
\u201cThe big concerns are the uncertainty,\u201d said Maluleke.<\/p>\n","protected":false},"excerpt":{"rendered":"
South Africa looks set for much better growth in 2025 thanks to increased spending and investment, according to analysts at Absa.<\/p>\n","protected":false},"author":59,"featured_media":813796,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[1850,853],"class_list":["post-818192","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-bloomberg","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/818192","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=818192"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/818192\/revisions"}],"predecessor-version":[{"id":818290,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/818192\/revisions\/818290"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/813796"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=818192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=818192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=818192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}