The National Treasury has projected that South Africa’s economy will grow by 1.9% in 2025, with a steady average growth rate of 1.8% expected over the next three years.
Finance Minister Enoch Godongwana presented these figures while delivering the National Budget in Parliament, signalling a cautiously optimistic outlook for the country’s economic recovery.
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While the Treasury forecasted growth rate is modest, it marks a hopeful step towards stabilizing the economy after a series of challenging years.
The government is banking on several factors to support this recovery, including improved investor confidence, a stable electricity supply, lower interest rates, and a reduction in risk premiums.
Challenges of the Past: Weak Economic Performance in 2024
Despite these positive projections, the country faced significant setbacks in 2024, with GDP growth barely reaching 0.6%.
Minister Godongwana highlighted weaknesses in the agriculture and transport sectors, particularly in the third quarter, as key contributors to the lower-than-expected growth.
The minister acknowledged that South Africa’s economy has struggled for over a decade, with GDP growth averaging under 2%, far below what is needed to meet the nation’s expanding needs.
This stagnation underscores the importance of achieving more robust and inclusive growth to address key issues like poverty and inequality.
Path to Recovery: Key Drivers for Economic Growth
To achieve the treasury projected growth and address long-standing challenges, the government is focusing on policies that will stimulate economic recovery.
Central to this strategy is the expectation that investor confidence will rise, bolstered by government efforts to stabilize electricity supply and reduce the country’s risk premium.
Moreover, lower interest rates are anticipated to support consumer spending and investment.
However, the Treasury acknowledges that the country’s growth needs to be faster and more inclusive to achieve goals such as redistribution, redress, and structural transformation.
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