Consensus builds around modest 1.1% GDP growth in 2025

The data releases for H1.25 and Q3.25 to date are supportive of an outcome of at least 1.0% y/y for this year’s GDP growth, with the IMF’s forecast now in line with Investec’s, at 1.1% y/y, as the IMF lifted it 0.1% y/y from its July WEO report.

South Africa’s data releases for Q3.25 to date are supportive of an outcome of just above 1.0% y/y for 2025’s GDP growth, with Q3.25’s GDP figure due to be published at the start of December as usual, and likely to be lower than Q2.25’s outcome.

The Bloomberg consensus has recently been revised, to 1.1% y/y as well, from 1.0% y/y, and SA’s Q2.25’s GDP’ growth surprised to the upside, at 0.8% qqsa, on the marked outperformance of the agricultural sector this year, and base effects.

Overall, the IMF has lifted its economic forecasts for 2025, by 0.1% y/y for both emerging and advanced economies, compared to its forecasts made at its July WEO (World Economic Outlook) publication, and by more substantially since April.

US tariff delays benefit South Africa... for now

The US’s numerous delays in implementing its universal tariffs have had a positive impact (see Q4.25 Macro-economic outlook, 1st October see contact details below), benefiting countries’ growth expectations for this year somewhat on the whole. 

US trade policy has been volatile and disjointed to date in 2025, with a number of delays in universal tariff updates to finally early August. Indeed, most of South Africa’s exports to the US have avoided this tax for most of the year.

However, next year the tariffs, if they remain in effect, would have a less subduing impact on economic growth globally. The IMF forecasts world output growth for this year at 3.2% y/y, with a 0.2% y/y lift from its July forecast, and 0.4% y/y from April. 

The IMF has also revised up US growth in its October WEO by 0.1% y/y, to 2.0% y/y this year, and by 0.1% y/y as well for next year, to 2.1% y/y, but has left its global growth forecast unchanged, at 3.1% y/y for 2026.

For 2026, the IMF sees South Africa’s economic growth rate at 1.2% y/y, which is below our forecast of 1.5% y/y, as we continue to anticipate alleviations in the domestic freight crisis, driving faster export-led economic growth domestically.

The Bloomberg consensus was also recently revised down to 1.5% y/y, from 1.6% y/y in the September forecast results. The risk to next year’s growth outlook remains for more severe protectionism from the US, impacting global and local growth.

Impact on SA commodity prices, manufacturing and agriculture

Concerns over US, and global, growth later this year, and next, have had an impact on manufacturing production and sentiment, resulting in a suppressing effect on commodities’ prices excluding precious metals.

In rand real value terms, mineral sales fell -0.1% for the first two month of Q3.25, versus the first two months of Q2.25, after rising in Q2.25 by 19.9% qqsa (quarter on quarter, seasonally adjusted), as hefty mineral sales are not being repeated.

The trade balance consequently fell in the first two months of Q3.25, to R23.5bn from R33.0bn for the first two months of Q2.25 (both cumulative), with the trade sector weakening on lower commodities exports, and not direct US tariff impacts.

In addition, industrial production in real rand value terms fell by -0.1% for the first two months of Q3.25, versus the first two months of Q2.25, as real sales fell -0.1% for minerals, -6.0% for electricity, and slowed notably to 1.8% for manufacturing

The ample field crop harvests this year has bolstered agriculture production substantially, without which Q1.25’s GDP would have contracted by -0.1% qqsa (not grown 0.4% qqsa), and Q2.25 only expanded by 0.4% qqsa, instead of 0.8% qqsa.

Cheeringly, recent data from the consumer side shows a modest uplift, of 0.7% for the first two thirds of Q3.25, versus the same period in Q2.25 in both retail and wholesale real sales and a 1.7% lift in the same period for real motor vehicle sales.

IMF calls on policymakers to "restore confidence"

In the uncertain global environment, the IMF recommends “policymakers … restore confidence through credible, transparent, and sustainable policies. Trade diplomacy should be paired with macroeconomic adjustment. Fiscal buffers should be rebuilt.”

And furthermore, “Central bank independence should be preserved. Efforts on structural reforms should be redoubled. “Industrial policy may have a role, but full consideration should be given to opportunity costs and trade-offs involved in its use.”