The South African Reserve Bank (SARB) has upgraded its GDP growth forecast for 2025 from 0.9% to 1.4%, a revision announced after its September Monetary Policy Committee (MPC) meeting. This positive outlook is supported by a stronger-than-expected GDP growth of 0.8% quarter-on-quarter in Q2 2025, buoyed by solid performance in the manufacturing, mining, and trade sectors, largely due to improved supply conditions and minimal load shedding. Household consumption has also increased, driven by lower domestic interest rates and subdued inflation, contributing positively to the overall economic momentum.
Despite the domestic gains, South Africa’s external trade position remains a key concern. The current account deficit (CAD) widened to 1.1% of GDP in Q2 2025, primarily due to a narrower trade surplus caused by weaker export volumes. The country faces significant headwinds from global trade disruptions and the potential impact of higher US tariffs, especially as the renewal of the African Growth and Opportunity Act (AGOA), which lapsed in September 2025, remains uncertain due to diplomatic tensions with the US.The South African Rand (ZAR) has shown resilience, appreciating by 7.9% against the US Dollar between April and September 2025, largely benefiting from Dollar weakness. However, its stability hinges on the US economic trajectory and the outcome of the AGOA renewal. Structural reforms aimed at addressing domestic logistical inefficiencies will be crucial for the economy to sustain its projected growth and bolster competitiveness against persistent global trade protectionism.
