{"id":848332,"date":"2026-01-20T13:08:32","date_gmt":"2026-01-20T11:08:32","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=848332"},"modified":"2026-01-20T13:08:32","modified_gmt":"2026-01-20T11:08:32","slug":"one-deal-south-africa-has-to-make","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/848332\/one-deal-south-africa-has-to-make\/","title":{"rendered":"One deal South Africa has to make"},"content":{"rendered":"\n

South Africa’s economy is starting to show signs of life, but breaking free from a decade of stagnation will require large reforms for the nation’s domestic and foreign policy\u2014and nailing down AGOA.<\/p>\n\n\n\n

The last decade has been tough for South Africa, marred by state capture, the Covid-19 pandemic, the July 2021 unrest and heavy floods in 2022, which all played a role in decimating the economy. <\/p>\n\n\n\n

Apart from a rebound from the Covid-19 impact in 2021, South Africa’s economy has not seen real GDP growth above 2.0% over the last 10 years. <\/p>\n\n\n\n

Given that the population grows by around 1.3% per year, the South African population has, on average, grown poorer over the last decade.<\/p>\n\n\n\n

For 2025, the International Monetary Fund (IMF) raised South Africa’s growth prospects to 1.3%, with expectations of 1.4% in 2026. This, however, is relatively low compared to peers in emerging markets.<\/p>\n\n\n\n

GDP is expected to grow in the coming years, potentially reaching 3.0% by 2030. However, the growth is highly dependent on strategic reforms and improved international relations.<\/p>\n\n\n\n

Aluma Capital Chief Economist Frederick Mitchell noted that South Africa’s economic share in both Africa and the global arena has declined.<\/p>\n\n\n\n

South Africa contributed 28% to the African GDP in 1994, but this has dropped to around 14% by 2024. Its share of the global economy has also declined from 0.54% to 0.37% over the same period. <\/p>\n\n\n\n

“This decline is symptomatic of broader systemic issues, including poor policy frameworks, infrastructural decay, and insufficient investment in critical sectors, most notably manufacturing,” said Mitchell.<\/p>\n\n\n\n

“The manufacturing sector, a cornerstone for employment and economic stability, has suffered a disturbing decline of over 6% since the onset of the COVID-19 pandemic.” <\/p>\n\n\n\n

Manufacturers have cried foul over weak demand and inadequate infrastructure, which has led to declining confidence.<\/p>\n\n\n\n

Mitchell said that resolving these issues is essential, not only for recovery but also for cultivating a competitive edge in both local and export markets.<\/p>\n\n\n\n

AGOA renewal key <\/h2>\n\n\n
\n
\"\"<\/a>
Aluma Capital Chief Economist, Frederick Mitchell<\/figcaption><\/figure><\/div>\n\n\n

The economist added that the key to South Africa’s recovery lies in renewing the African Growth and Opportunity Act (AGOA), which offers crucial trade benefits for African exports to the United States.<\/p>\n\n\n\n

Although a Bill to extend AGOA has received bipartisan support in the US House of Representatives, it remains unclear if South Africa will be included amid strained diplomatic relations.<\/p>\n\n\n\n

“The recent imposition of US tariffs, including a new 25% tariff on countries engaging with Iran, adds another layer of complexity to these economic challenges,” said Mitchell. <\/p>\n\n\n\n

This is of particular concern for South Africa following military exercises between South Africa, China, and Russia, amidst ongoing US tensions.<\/p>\n\n\n\n

Mitchell said that these exercises call for a serious re-evaluation of the country\u2019s position in the global trade landscape, as they could jeopardise South Africa’s trade with the USA. <\/p>\n\n\n\n

Another threat looms in the form of an economic slowdown in South Africa’s largest trading partner, China, which could severely limit South Africa’s recovery.<\/p>\n\n\n\n

“As a nation heavily reliant on trade, particularly with the global shift in commodity prices and demands, any downturn in the Chinese economy will resonate back home, risking another setback in growth rates and investment levels,” said Mitchell. <\/p>\n\n\n\n

On the more positive side, the South African Reserve Bank (SARB) is likely to cut interest rates further, bolstered by a stronger rand against the US dollar, lower inflation expectations and stable oil prices.<\/p>\n\n\n\n

The Reserve Bank is expected to cut interest rates by around 50 basis points in 2026, with the first cut widely scheduled for March 2026, but this could be brought forward to January<\/a>. <\/p>\n\n\n\n

“While the prospects for growth in South Africa\u2019s economy are beginning to stabilise, the trajectory remains fragile, shaped by both domestic and global events,” said Mitchell.<\/p>\n\n\n\n

“By fostering a harmonised approach to policy reform and international relations, particularly with the US, South Africa can strive towards sustainable growth.” <\/a><\/a><\/a><\/a><\/a><\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa’s economy is starting to turn a corner, but economists warn of risks ahead\u2014and one policy the country needs to nail down for success.<\/p>\n","protected":false},"author":95,"featured_media":848397,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[21743,3921,3619],"class_list":["post-848332","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-aluma-capital","tag-international-monetary-fund","tag-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848332","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=848332"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848332\/revisions"}],"predecessor-version":[{"id":848400,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848332\/revisions\/848400"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/848397"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=848332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=848332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=848332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}