MTBPS: SA economic growth outlook cut to 1.2% for 2025, Treasury pins hope on reforms
MID TERM BUDGET
Finance Minister Enoch Godongwana delivered his Medium-Term Budget Policy Statement (MTBPS) on Wednesday.
Image: Independent Newspapers
The National Treasury has revised downwards its economic growth forecast for 2025, in line with slower than previously expected global growth, even though it pinned its hopes for an optimistic on structural reforms, particularly in energy and logistics sectors.
South Africa's real gross domestic product (GDP) is now forecast to be 1.2% in 2025, down from 1.4% previously projected in the February Budget.
This is on the back of weaker growth outcomes in the first half of the year, a subdued external environment, and low levels of consumer and business confidence.
However, the 1.2% growth estimate for 2025 is more than double compared to 0.5% growth experienced in 2024, rising to 1.8% in the medium-term buyoed by investment in infrastructure spending and reform implementation gains traction.
Finance Mininster Enoch Godongwana on Wednesday South Africa’s economic prospects are shaped not only by domestic factors but also by global developments.
"Domestically, we forecast real GDP growth of 1.2% for 2025, more than double the economic growth in 2024. The growth outlook strengthens moderately over the medium term," Godongwana said.
"We now forecast real GDP growth will average 1.8% between 2026 and 2028. The structural reforms we have embarked on, particularly in energy and logistics, will be key to lifting our rate of growth closer to levels demanded by our developmental needs."
Godongwana said Treasury's strategy for faster growth and healthier finances continues to be anchored on four pillars; maintaining macroeconomic stability, implementing structural reforms, building State capability, and supporting growth-enhancing infrastructure.
Meanwhile, Godongwana said global growth is estimated to slow slightly, to 3.2% in 2025, amid ongoing trade tensions, geopolitical uncertainty, and supply chain disruptions.
Godongwana said while the shocks of the unilateral tariffs imposed by the United States have not materialised as severely as expected, their delayed effects coupled with rising protectionism, pose future risks to global productivity and price stability.
"Global equity markets have surged, driven by AI-related stocks and central bank rate cuts, but this rally carries the risk of sudden reversals. Given this uncertainty, it is critical that we leverage the immense opportunities presented by the sub-Saharan region," he said.
"We continue to make progress in the implementation of the Africa Continental Free Trade Agreement to strengthen multilateralism and regional cooperation. Under the South African presidency of the G20, significant strides have been made to strengthen macroeconomic fundamentals of debtor countries, many of them African, to build a more prosperous region and continent to support faster trade."