{"id":819867,"date":"2025-04-07T13:00:00","date_gmt":"2025-04-07T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=819867"},"modified":"2025-04-07T13:06:43","modified_gmt":"2025-04-07T11:06:43","slug":"big-banks-slash-expectations-for-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/819867\/big-banks-slash-expectations-for-south-africa\/","title":{"rendered":"Big banks slash expectations for South Africa"},"content":{"rendered":"\n

Economists from South Africa’s top banks have downgraded their GDP growth estimates for 2025, with increased domestic taxes and high tariffs from the United States hurting the nation. <\/p>\n\n\n\n

South Africa has faced a week for the history books, with US President Donald Trump implementing a 30% ‘reciprocal’ tariff on South Africa, claiming that South Africa places a 60% tariff on US goods. <\/p>\n\n\n\n

The US President’s tariff is based on the United States’ trade imbalance with South Africa, not the tariffs that South Africa imposes on US goods, which are roughly 7.5%.<\/p>\n\n\n\n

Moreover, the tariffs mean that the African Growth and Opportunity Act (AGOA)\u2014which gives South Africa duty-free access to the American market\u2014is dead in the water, <\/p>\n\n\n\n

The USA is one of South Africa’s largest trading partners, and the new tariffs are set to impact the economy severely.<\/p>\n\n\n\n

Locally, tensions within the Government of National Unity (GNU) have also increased, with the DA and FF Plus rejecting the 2025 Budget, which included a one percentage point increase in VAT.<\/p>\n\n\n\n

The DA’s refusal to support the Budget has cast doubt on its continued involvement in the GNU. <\/p>\n\n\n\n

The DA’s business-friendly approach has been seen as a positive by markets, and a scuppering of the alliance would likely have an adverse effect on sentiment and investment.<\/p>\n\n\n\n

Moreover, the increase in VAT and personal income tax bracket creep are expected to add further strain on already cash-strapped households, even if National Treasury is supposedly looking at alternatives. <\/p>\n\n\n\n

These local and domestic developments do not bode well for South Africa, which had just looked set to exit a period of economic malaise. <\/p>\n\n\n\n

South Africa’s GDP only grew by 0.7% in 2023 and 2024. <\/p>\n\n\n\n

The numbers are lacklustre at best and do not keep up with population growth of 1.5%. In real terms, South Africans are getting poorer per capita.<\/p>\n\n\n\n

However, that South Africa experiences growth at all is something of a miracle, given the intense levels of load shedding in 2023 and the election uncertainty in 2024.<\/p>\n\n\n\n

Prospects for 2025 started out well, with many economists and analysts seeing growth between 1.5% and 2.0% and the Presidency chasing growth of over 3% based on the government’s reforms.<\/p>\n\n\n\n

National Treasury sees growth of 1.9%, which should be enough to ensure that South Africa’s population get ‘richer.’ <\/p>\n\n\n\n

However, following the week of hard knocks, these targets are now seen as over-optimistic and unrealistic, with major banks slashing their forecasts.<\/p>\n\n\n\n

FNB: 1.6% (-0.1pt<\/mark>)<\/h2>\n\n\n
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FNB’s economists have adjusted their macroeconomic projections to include the anticipated impact of the proposed VAT increase, fiscal drag and the expected decline in consumer confidence. <\/p>\n\n\n\n

They have also assessed the implications of the ongoing United States (US) trade policy recalibration and the potential exclusion from the African Growth and Opportunity Act (AGOA).<\/p>\n\n\n\n

Looking at local politics, the group does not foresee changes in the political landscape that would alter its baseline view on economic reforms. <\/p>\n\n\n\n

That said, the situation remains complex, and the probability of an accelerated reform scenario is low. <\/p>\n\n\n\n

Despite remaining cautiously optimistic about the economy’s recovery, FNB’s economists have revised their real GDP growth projections slightly downward.<\/p>\n\n\n\n

“This reflects a weaker external environment, increased household tax burdens, and subdued consumer sentiment,” said FNB. <\/p>\n\n\n\n

“The anticipated rebound in fixed investment, following a 3.7% contraction last year, is expected to be constrained by continued policy uncertainty.” <\/p>\n\n\n\n

Real GDP growth has thus been revised down by 0.1ppt, with projected growth now at 1.6% for 2025<\/strong>, 1.7% for 2026 and 2.0% for 2027. <\/p>\n\n\n\n

Bank of America: 1.4% (-0.2pts<\/mark>)<\/h2>\n\n\n
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Bank of America has downgraded its GDP growth forecast for 2025 from 1.6% to 1.4%, a forecast worse than FNB’s. <\/strong><\/p>\n\n\n\n

Bank of America is the second-largest bank in the world. It operates in South Africa, but mainly offers research and customer support services instead of a retail bank offering. <\/p>\n\n\n\n

Bank of America’s Chief Africa Economist, Tatonga Rusike, said that the drop is due to slower-than-expected economic reforms, slow global growth and global uncertainty.<\/p>\n\n\n\n

Rusike said South Africa’s growth prospects are at risk due to the uncertainty surrounding the GNU after the DA refused to back the ANC’s 2025 Budget. <\/p>\n\n\n\n

Although the DA could exit the GNU, Rusike said that this would not result in a complete breakdown of the GNU, with smaller parties joining the GNU and acting as kingmakers. <\/p>\n\n\n\n

Nevertheless, Rusike said GDP growth is on an upward trend following two years of sub-1% growth. Growth is seen at more than 1.5% over the medium term.<\/p>\n\n\n\n

Investec: 1.3% (-0.5pts<\/mark>)<\/h2>\n\n\n
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Investec have also lowered its GDP expectation for South Africa from 1.8% to 1.3%<\/strong>, the worst of all three banks and based on the escalation of a global trade war and the loss of AGOA. <\/p>\n\n\n\n

Investec Chief Economist Annabel Bishop said that the 30% tariff introduced on South Africa by the US and the expected loss of AGOA benefits will severely impact South Africa’s vehicle and agriculture exports. <\/p>\n\n\n\n

Bishop said that the uneven tariff impositions will mean that the demand for South African goods will be lost. <\/p>\n\n\n\n

Bishop said that the recent political tensions over the Budget and the stability of the GNU have negatively affected the rand. <\/p>\n\n\n\n

However, Bishop believes that the DA is likely to continue to wish to remain in South Africa’s coalition government. <\/p>\n","protected":false},"excerpt":{"rendered":"

Economists at some of South Africa’s biggest banks have cut their 2025 GDP forecasts over increased global and local budget tensions. <\/p>\n","protected":false},"author":95,"featured_media":812935,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[5349,76,1498,3796],"class_list":["post-819867","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-bank-of-america","tag-fnb","tag-investec","tag-national-treasury"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/819867","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\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=819867"}],"version-history":[{"count":10,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/819867\/revisions"}],"predecessor-version":[{"id":819920,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/819867\/revisions\/819920"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/812935"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=819867"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=819867"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=819867"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}