Els noted that consumer price index (CPI) inflation was expected to average around 3.8%, alongside predictions of two further interest rate cuts of 25 basis points each in 2025. Picture: Henk Kruger/Independent Newspapers
South African economists and agricultural leaders Wednesday revealed expectations of a notable recovery for the country’s economy, anticipating a gross domestic product (GDP) growth of close to 2% in 2025.
In a panel discussion, Old Mutual Group chief economist, Johann Els, set the tone by forecasting a GDP growth rate of 2.2% for the coming year.
Els noted that consumer price index (CPI) inflation was expected to average around 3.8%, alongside predictions of two further interest rate cuts of 25 basis points each in 2025.
Furthermore, he expressed confidence in the strengthening of the rand against the US dollar, with a target of R17 by the close of 2025.
“Currently holding a credit rating of 'stable', I believe international credit rating agencies will soon advance South Africa’s outlook from stable to positive,” Els said.
This optimism is supported by signs of improvement following a decade marked by challenges, including the Global Financial Crisis, political uncertainty, and international strife like the Russia and Ukraine conflict.
Els pointed towards the positive impact of an extended period without load shedding, which has enhanced both business and consumer confidence.
He noted that the formation of the Government of National Unity (GNU) had also created a more conducive environment for economic recovery, contributing to lower inflation rates and a stabilising rand exchange rate anticipated from 2024 onwards.
Looking ahead to next week’s Budget Speech by finance minister Enoch Godongwana, Els expressed hope for a fiscally conservative approach, calling for reduced deficits and primary surpluses to support economic stability.
He emphasised the importance of controlled expenditure linked to the support for State-Owned Enterprises (SOEs) and managing wage pressures.
Wandile Sihlobo, the chief economist at the Agricultural Business Chamber of South Africa (Agbiz), echoed Els’ sentiments about the agricultural sector’s potential for growth in 2025.
“Despite experiencing drought conditions for much of 2024, we expect a rebound in agriculture thanks to improved rainfall patterns across many regions,” he said.
Sihlobo highlighted that preliminary data from the Crop Estimates Committee indicates that South African farmers planted approximately 4.45 million hectares of summer grains and oilseeds for the 2024-25 season, reflecting minor growth from the previous year.
He also addressed the nation’s progress in managing animal diseases, citing the control of foot-and-mouth disease and avian influenza as crucial for restoring the livestock and poultry sectors.
Another positive factor is improved dam levels and a stable electricity supply, vital for irrigation, which is set to benefit the horticulture sector significantly in 2025.
“We must continue our efforts on both animal and plant health issues as these are key for agricultural long-term productivity gains. The government must continue to improve roads and the effectiveness of municipalities should remain high on the agenda,” Sihlobo said.
However, Sihlobo noted the lingering issue of ineffective ports and the need for South Africa to enhance its export strategies amid geopolitical tensions.
Political analyst Prince Mashele observed that while the GNU has made strides, concerns loom ahead of the upcoming 2026 Local Government Elections.
He hypothesised that the African National Congress (ANC) could lose votes, leading to more coalition-led municipalities, which may pose further challenges for service delivery and economic performance.
“However, there are concerns about the 2026 Local Government Elections as I expect the ANC to lose more votes and that is going to lead to more coalition municipalities,” Mashele said.
“Service delivery is already in a state and it will get worse in 2026 with more coalition-led municipalities; this could well have an impact on our economy.”
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