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We revised 2025’s forecast GDP growth rate to 0.9% y/y early this month on the poor Q1.25 GDP outcome, weakening global growth environment and insufficient progress at Transnet, with the Bloomberg consensus forecast now near 1.0% y/y.
June’s Bloomberg forecast (a median of twenty-four economists’ estimates) for this year’s GDP growth rate has seen a downward trajectory, from 1.3% y/y in May to 1.1% y/y in June, with 1.5% y/y in March and April, and 1.7% y/y in February.
GDP growth has averaged 1.7% y/y over the past decade, from 4.2% y/y in the 2000s but 0.4% y/y this decade to date, with the Covid-19 lockdowns not the sole reason by any means for the collapse in SA’s economic growth rate this decade.
Progress on improving Transnet’s capacity, on both the rail and port sides to end the domestic freight crisis that weakens South Africa’s growth rate, continues to be too slow, with both mining and manufacturing production contracting in Q1.25.
The SOE noted in March 2025 “(c)ritical challenges faced by Transnet … that have macro-economic implications, have led to muted economic growth for the country”, including unreliable supply of electricity, increased crime and rail underinvestment.
Bouts of loadshedding starting up this year signify insufficient electricity supply to consistently meet demand when planned and unplanned maintenance occurs, with the country’s extremely aged electricity distribution system prone to breakdowns.
In the main, while loadshedding remains largely in abeyance, economic growth does put strain on the aged grid and limits the economy’s growth beyond 1.0% y/y, with the public-private-partnerships planned to drive improved supply conditions yet to sufficiently occur.
Uncertainty around the performance of the global economy has also been high this year, with trade and tariff negotiations ongoing, and the Liberation Day tariffs' 90-day pause set to end in early Q3.25, with few countries having solidified tariff rollbacks.
South Africa’s growth this year is expected above 2024’s weak 0.6% y/y, but much depends Transnet’s capacity to lift its freight delivery substantially further for economic growth to near 3.0% y/y, which is still only likely by the end of this decade.
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At the midpoint of 2025, the global economy stands at a precarious intersection of cooling inflation on one side, rising geopolitical tensions on the other. In this episode of No Ordinary Wednesday, Jeremy Maggs speaks with Investec Chief Economists Annabel Bishop (South Africa) and Phil Shaw (UK) about the shocks and signals shaping markets from the Strait of Hormuz and the US tariff clock to South Africa’s subdued growth and greylisting outlook.
Transnet recently highlighted (in March this year) that its critical challenges include rolling stock shortages (insufficient numbers of operable trains), decreased operational capacity, declining operational performance and service delays.
In addition, the SOE reported it is beset by network vandalism and theft, its efficiency challenged or aged nature of its equipment, the ongoing port congestion as the utility cannot sufficiently meet freight needs at the ports and its high costs.
Transnet notes its operational problems have stunted South Africa's economic growth, with a declining economic growth rate and declining economic outlook, increased cost of logistics, decreased foreign investment and reduced trade volumes.
2025 is close to the halfway mark, but little land freight data is available for Q2.25 (Stats SA) other than the dip in April, with the year lower to date y/y. Regulatory changes, policy reforms, planning development are all noted by Transnet.
Operation Vulindlela (2020) provided details in early 2021 to “(c)orporatise the Transnet National Ports Authority” “to increase the competitiveness of South Africa’s ports by separating its functions from other divisions within Transnet” by 2023.
Mid-2024’s progress report by Transnet on the corporatisation of Transnet National Ports Authority (TNPA) saw “no real timelines … provided for the completion of the corporatisation of the authority” as “progress inches forward”, according to Maritime Review Africa.
March 2021 also saw plans for (r)educing costs and improving the efficiency of South Africa’s ports” for “the competitiveness of our exports and the overall functioning of the economy”, with Transnet still reporting challenges in these areas this year.
The March 2021 Operation Vulindlela booklet noted “the commercial separation of operations and rail infrastructure, which will enable third-party access to the freight rail network”. Transnet, this year, has given further updates of when this will occur.
The very slow path to opening the state’s transport monopoly to the private sector, ongoing efficiency problems noted by the entity, as well as higher costs and operational issues all continue to hold back GDP growth, as noted by Transnet.
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