South African financial markets have outperformed expectations, with the Johannesburg Stock Exchange (JSE) reaching record highs and the rand/dollar exchange rate rising despite a threat to exports from 30% US tariffs.
However, growth in Africa's largest and most industrialised economy has been stuck at about 1% for a decade and the outlook is uncertain, despite promises of reforms from the government of national unity (GNU) put together a month after the May 2024 election. These include:
- reforms on freight and rail;
- boosting power generation; and
- improving skills for South Africans left out of the job market.
GROWTH
Business indices show private sector hesitation to invest. South Africa's economy grew 0.8% in the second quarter of 2025, its fastest in two years.
The government wants 3% growth within three years. The central bank forecasts 2% by 2027.
EMPLOYMENT
South Africa has one of the highest unemployment rates in the world, at 33.2% in the second quarter.
Minister of employment and labour Nomakhosazana Meth told Reuters economic uncertainty meant nearly 100,000 jobs could be shed this year as companies such as ArcelorMittal, Goodyear and Ford South Africa lay off workers. She wants to provide 240,000 South Africans with job opportunities this year.
REFORMS
Years of mismanagement of key state institutions, notably state power utility Eskom, have hindered growth. In the past year the power supply has stabilised after years of blackouts.
Interventions to improve operations at the ports and freight rail company Transnet are also slowly bearing fruit.
FINANCIAL MARKETS
South African financial markets' strength over the past year is an “inconsistency” not easily explained, said Kevin Lings, chief economist at Stanlib.
He said local asset managers see equities as relatively cheap. The JSE has remained above July's 100,000-point high.
Miyelani Maluleke, an economist at Absa CIB, cites robust gold and platinum group metal prices. Meanwhile, ending a protracted row within the GNU over the budget boosted the rand.
“There's definitely less concern around government stability now,” he said.
“Reform is improving, some of the areas that have been big challenges.”
Reuters
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