2025 South African Economic Brief - Growth under pressure: South Africa's economic outlook amidst domestic constraints and global trade shocks

Occasional Paper 4/2025

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A P R I L 2 0 2 5

Daryl Swanepoel

MPA, BPAHons, ND: Co. Admin

Research Fellow, School of Public Leadership, Stellenbosch University

Abstract

This Economic Brief analyses the country's precarious economic situation, that is characterised by significant domestic challenges and global trade disruptions. Business confidence has been negatively impacted by the historic withdrawal of the National Budget due to the controversy over the Value-Added Tax increases which, although now agreed, has triggered government instability and legal disputes. Deteriorating relations with the United States threatens South African exports and have raised uncertainties regarding South Africa's ongoing participation in the African Growth and Opportunity Act (AGOA) which will seriously impact particularly the automotive and agricultural sectors. Amidst declining business and consumer confidence, economic growth remains stubbornly low. Persistent levels of high unemployment, particular among the youth, inequality and poverty, exacerbate the crisis, and risks social stability. While inflation is projected to moderate, the deep-seated structural weaknesses hinder recovery efforts. The brief emphasises the urgent need for comprehensive reforms to restore confidence, enhance competitiveness, and address systemic issues vital for sustainable growth.

1. Introduction

For the first time in the history of South Africa the National Budget as presented to Parliament by the Minister of Finance had to be withdrawn due to the controversy over a proposed Value-Added-Tax increase. Whilst the budget was subsequently re-introduced and approved, members within the National Executive voted against the budget proposals. Moreover, the budget is being procedurally challenged in the courts.

The aforementioned dynamics does not bode well for business and consumer confidence.

The budget has also been presented against the backdrop of geo-political turmoil. The United States administration initiated global trade war has put the global economy into turmoil. South Africa has not escaped the impact thereof. In fact, the country’s relationship with the United States has been deteriorating at a rapid pace, which has resulted in billions of dollars of aid being withdrawn.

Moreover, South Africa’s continued inclusion in the African Growth and Opportunity Act (AGOA), an agreement that provides eligible sub-Saharan African countries with duty-free access to the U.S. market for over 1,800 products, in addition to the thousands more than 5,000 products eligible for duty-free access under the Generalized System of Preferences programme (Office of the US Trade Representative, N.d.) is uncertain. The author, with the benefit of having had extensive discussions with senior public policymakers within the US, is of the view that unless the relationship between the two countries are rapidly restored, South Africa’s graduation out of AGOA is almost certain. South Africa’s automotive and agricultural sectors will, under such circumstances, be particularly hard hit.

These dramatic turn of events happen within a slow-growth economic environment, with low business and consumer confidence and economic infrastructure backlogs that are inhibiting the further expansion of the economy. Without expanding the economy the high employment rate cannot be addressed. The social stability of the nation is at risk.

This paper assesses the current state of the South African economy, and the prospects for its recovery and growth. It further considers the implications of the 2025 national budget and the emerging ‘global trade wars’ thereon.

This paper is the result of the combined insights of a number of reputable economists and financial analysts that participated in a webinar workshop and additional interviews in the first part of April 2025. The insights have been synergised by the author. The views expressed during the webinar and interviews have informed the content of the paper, but cannot be ascribed to any one of them. The interpretation of the content is that of the author.

The experts consulted include:

• Dr Adel Bosch, Senior Economist, Development Bank of Southern Africa (DBSA)

• Dr Miriam Altman, Strategist, Economist and Social Activist, Altman Advisory

• Prof William Gumede, Associate Professor, School of Governance, Witwatersrand University

• Mr Theo Vorster, CEO and Co-founder, Galileo Capital

• Mr Isaac Matshego, Senior Economist, Nedbank

• Dr Roelof Botha, Economic Advisor to the Optimum Investment Group

• Ms Lara Hodes, Economist, Investec

The webinar workshop and interviews were structured in such a way as to address the following five issues:

• A prognosis of the current state of the economy

• The impact of the 2025/2026 national budget proposals thereon

• The likelihood of meeting the 1,9% GDP growth target

• Further interventions needed to spur meaningful GDP growth

• Should US impose tariffs on and graduate South Africa out of AGOA, how serious will the impact be on the South African economy?

In addition to the content generated through the workshop and interviews, some desktop research was done where further expansion, clarity or verification was needed. The main points of the paper is summed up in the text-box below:

 Summary generated by Grammarly AI, verified and amended by author

2. Macroeconomic overview

The South African economy’s recovery is fragile. It remains clouded as growth remains subdued and continues to stagnate. The economy recorded a meagre 0.6% GDP growth rate in 2024. This is way below the threshold necessary to generate significant job creation and to reduce poverty. The growth continues to be slow in spite of the relatively favourable global economic environment during the past years, which would suggests deep-rooted structural weaknesses within the domestic economy.

Key indicators further highlight the severity of the economic malaise:

• Business confidence continue to be low. Indices hover around a worrying 45 index points.  (the neutral threshold is 50 points). This is especially troubling given that the low confidence has been sustained below the 50 point mark for at least five years (Trading Economics, N.d.(1)). The below 50 points threshold figure reflects the widespread pessimism and a lack of forward-looking investment sentiment among businesses. For outsiders to invest in the country, the economy will need to be more competitive, for which the ease of doing business will have to be addressed. To this end the levels of red tape will need to be reduced considerably.

• Consumer confidence has similarly declined, further illustrating the erosion of public faith in the ability of the economy to mend. Consumer confidence in South Africa decreased to -20 points in the first quarter of 2025 from -6 points in the fourth quarter of 2024 (Trading Economics, N.d.(2)).

This erosion of confidence perpetuates economic underperformance, since businesses delay investment and expansion, while households reduce discretionary spending.

The stubbornly high unemployment rate (32.1%) as at the end of the third quarter of 2024, and especially that of the youth (45.5%) (Stats SA, 2025), undermines South Africa's long-term growth prospects. The failure to integrate large segments of the population into productive employment limits household consumption and contributes to social instability.

Compounding these issues are chronic poverty and high levels of inequality, which are among the highest globally.

Inflation, is expected to be in the region of 4.5% in 2025 (SARB, 2025 (1)), thus showing signs of moderation, but challenges remain. A stable inflation environment is critical for consumer purchasing power. The South African Reserve Bank (SARB) has limited room to further cut interest rates given the inflationary pressures and the need to maintain financial market stability. Thus, the current monetary policy landscape offers little space for expansionary measures to stimulate demand.

High interest rates do not only refer to the supply side, but also the demand side, which is closely related to the type of investment we seek as a country. Investments in bonds, shares and deposits provide relatively high rates of return. Investors find it more attractive to invest in these instruments that a relatively risk-free, as opposed to investment into plant and machinery which carries much higher risk.

The down side of this is that South Africa seeks investment into real production, since this can boost both exports and jobs.

Also to be considered is the inflationary impact of the punitive US tariff regime on global inflation and the real possibility of a US and global recession, which JP Morgan suggest is a 60% probability (Siddarth, 2025).

The above inflation salary increase for the public service (that is 5.5% against the 4,5% anticipated inflation) (Moloi, 2025) will place further upward pressure on inflation and reduce the revenue available for public services and infrastructure.

The electricity supply, whilst relatively stable over the last few months, continues to plague the economy. The threat of loadshedding remains, and is putting the brake on expansion in manufacturing and other high-energy use sectors. The disruption in the supply of electricity negatively impacts productivity and dampens investor sentiment.  The unpredictable nature of the electricity supply has also led to many companies having to incur additional costs by investing in alternative energy solutions, which reduces the overall competitiveness of the South African business environment and discourages both domestic and foreign investment.

The energy crisis is contributing to a broad sense of societal discontentment in the economy's ability to deliver. The power outages hinder educational institutions, medical facilities and small businesses. It is disrupting their daily operations and is exacerbating inequality between communities that have varying access to alternative energy solutions.

The growing disparities need to be addressed urgently. Government can do so through the introduction of targeted interventions, which could include, for example, subsidies for off-grid solutions and the prioritisation of energy reforms.

The national budget presumes a 1.9% GDP growth for the fiscal year (Treasury, 2025). Given the external shocks triggered by the US tariff war, the impact thereof on global inflation and the upward pressure on local inflation resulting from the VAT increase, together with the underperformance of actual 2024 GDP growth against projected GDP growth (as can be seen from the graph below), and a reduction in consumer spending, it is highly unlikely that the 1.9% target will be realised. It would mean a trebling of GDP growth from 2024 levels, and there is little evidence to suggest that the economic structural deficiencies will be dramatically corrected in the short term. A target of around 1.5% is more realistic, and may even be optimistic.

On the back of expected higher inflation and lower than budgeted GDP growth, it is likely that the revenue targets set in the budget will not be achieved.

In terms of gross fixed capital formation, the National Development Plan envisages increasing it from 17 percent to 30 percent by 2030 (Parliament, 2025). However, when one considers current investor confidence and that the average in emerging markets is around 25%, it seems a little over optimistic.

Summary generated by Grammarly AI, verified and amended by author

3. Fiscal framework and revenue composition

Government revenue is far too heavily dependent on a narrowing and shrinking tax base, which places the South Africa's fiscal framework under considerable strain.

Individual income taxes is the largest contributor to government income. It is followed by value-added tax (VAT), corporate taxes, fuel levies and customs duties. This structure exposes government to significant risks during periods of economic downturn, more so when unemployment rises and real incomes decline.

Since South Africa's tax base is so small, the over-reliance on individual taxpayers is particularly problematic. With only around 7.9 million taxpayers out of a population of over 60 million, of which 1 million pay 60% of all income tax, and 28 million welfare recipients, there is a serious risk to fiscal sustainability (Business Tech, 2025 (1)).

The regressive nature of VAT further exacerbates the already high levels of inequality, since it disproportionately affects low-income households who spend most of their income on consumption.

The decision to increase VAT by 0.5% - that is from 15% to 15.5% - will undoubtedly have an impact on consumer spending, as well as on inflation. Economists predict the increase could depress GDP growth by up to 0.1% annually and raise inflation by 0.25%. Given the fragile state of consumer confidence, any tax increase could further erode household disposable income and reduce overall demand.

That said, as discussed previously, the likelihood of a GDP growth being achieved is questionable.

Because what also needs to be noted is that most of South Africa’s economic growth over the last decade has been from consumer spending. Unless other areas of the economy and other sectors of the economy can stimulated, household consumption is expected to drive economic growth in the immediate period. It is important to note that consumer spending last year most probably prevented South Africa from going into recession. And the two-pot pension reform, increased household spending towards the end of the year, which further helped.

In the context of consumer driven growth, to raise value added tax, even if  only by 0.5%, will dampen consumer confidence and undermine the consumer spending growth. It is likely to drag down economic growth. In a VAT increase scenario, businesses are likely to pass on the cost to consumers. That, in turn, will drive up inflation. This means that any rise in VAT, even if it's only 0.5%, is unlikely to bring the revenue as envisaged by the Treasury, as it would depress other parts of the economy.

Customs duties, while a smaller component of total revenue, play a significant role in regional economic relations. South Africa collected approximately R160 billion in 2023/4 in customs duties of which it retained only around R80 billion (approximately 50%). The balance was distributed to neighbouring countries through the Southern African Customs Union (SACU) (SARS, 2024).

Even though only 10% of imports incur duties, these revenues form a crucial fiscal pillar for SACU member countries such as Lesotho, Eswatini, Namibia, and Botswana. Transfers to these countries of around 50%, a figure that vastly surpasses their proportional share of the duty-bearing imports. South Africa 97.4% to the pool (SARS, 2024).This raises questions with regard to the equity and sustainability of the current revenue-sharing arrangements.

The current structure of SACU revenue distribution not only strains South Africa's budget but also creates a dependency syndrome among member countries, where in some cases, these transfers often make up more than 50% of their revenue. It also serves as a disincentive for the diversification of their economies.

Consideration should be given to the re-evaluation of the SACU formula. The new arrangements should balance actual trade values and development needs in order to foster a more equitable regional partnership.

 Summary generated by Grammarly AI, verified and amended by author

4. Public expenditure and debt dynamics

South Africa's commitment to social support - which includes welfare grants, health and education - is reflected in its public spending. This commitment, however, brings pressure to bear on the national budget. Education receives over R500 billion annually, aimed at improving school infrastructure, teacher remuneration and the provision of other educational resources. But, despite the significant investment, the outcomes remain uneven. The high levels of disparity between urban and rural schools persist.

Social services, such as grants for the elderly, children, and disabled, receives R431 billion annually. These programmes are essential in mitigating poverty and inequality, but cognisance needs also to be taken of its growing share of the budget. As such, they limit fiscal space for other essential functions like infrastructure investment and innovation.

Perhaps most worrying is the rising cost of debt servicing.

As debt-to-GDP levels increase, more of the budget is being absorbed by interest payments that reduce the funds available for development. The fiscal crowding out is becoming a pressing issue, because it is constraining the government's ability to adequately invest in long-term growth drivers, such as economic infrastructure.

The South African government's gross loan debt is projected to reach nearly 75% of GDP in the coming fiscal years (Trading Economics, N.d.(3)), which some consider high. The reality is that South Africa does not has a super-high debt-to-GDP ratio, it just does not have the growth trajectory to support the payments, which is the problem.

Debt per se is not problematic, it what the debt is used for that matters. Investment into economic infrastructure will serve as a stimulus to generate growth and future revenue to service the debt. Unfortunately, the performance in public infrastructure spending is poor. Creating opportunity through the reform of Public Private Partnership (PPP) regulations – which government has started doing - can serve to overcome poor spending performance. An approach similar to the lifting of the embedded electricity generation restrictions enabling the private sector to invest, is another example.

But as confidence in the country's fiscal sustainability declines, borrowing costs may very well increase, further worsening the ability to service the debt burden. This dynamic creates a vicious cycle that can only be broken by sustained fiscal consolidation and/or economic growth.

To mitigate long-term risks, South Africa's approach to public spending needs to be more strategic. Treasury will need to conduct comprehensive spending reviews in order to evaluate efficiency, to eliminate duplication and to improve the outcomes of its spending.

Investments in digital governance and fiscal transparency could enhance accountability and improve budget implementation. So too, a switch to performance-based contracts and incentives to attract the private sector into managing some public services will introduce efficiencies with concomitant savings.

Currently Treasury is making cuts to education and health personnel, which is not sensible for long-range growth and capacity, since this will negatively impact the skills and capacity needed ten years down the line.

Summary generated by Grammarly AI, verified and amended by author

5. Infrastructure investment and economic revitalisation

Infrastructure investment serves as a major catalyst for economic recovery. It is therefore assuring that the 2025–2026 budget has allocated more than R1 trillion for the development and revitalisation of the country's energy and transport infrastructure (Magubane, 2025), since these investments will address key supply-side constraints, facilitate trade, and attract foreign direct investment (FDI).

However, for this to materialise, the existing implementation gap will have to be addressed, since projects are often held up in the planning stage as a result of bureaucratic inefficiency, the lack of project preparation, and insufficient feasibility assessments. Realising the benefits of infrastructure spending will require urgent improvements in project management capacity, procurement efficiency, and intergovernmental coordination.

Structural reforms have begun to create space for greater private sector participation, particularly through public-private partnerships (PPPs). These frameworks aim to de-risk infrastructure projects and leverage private capital in order to supplement public investment. Successful examples in the energy sector serve as a model that can be replicated and expanded to other sectors such as transportation, logistics, and housing.

Government should be the flywheel that crowds in capital. It should accept that it hasn’t got all the capital and it can’t do everything, but it can be the flywheel. It can allow infrastructure projects or supply chains or the regulatory environment to act as the stimulant to expand capital investment beyond its own sources.

The infrastructure backlogs in municipalities also needs to be urgently addressed. Inadequate water, sanitation and road infrastructure, serves as a barrier to development and hinders productivity and the communities' quality of life. Municipalities often lack technical expertise and financial management capacity, leading to underspending and inefficient use of grants. National government must play a proactive role in capacity-building and oversight.

In addition to conventional infrastructure, digital infrastructure is emerging as a key enabler of economic growth and development. Through the expansion of broadband access, particularly in underserved rural areas, new opportunities in education, healthcare and e-commerce can be unlocked. Government should, therefore, prioritise digital inclusion as a strategic component of its long-term infrastructure planning.

Special attention will also have to be given to reviving the manufacturing sector, which has all but collapsed. In the late 1980’s manufacturing contributed 25% to South Africa’s GDP. It now stands at around 9%. Contraposed to this, Malaysia also stood at 25% in the late 1980’s, but manufacturing now contributes around 30% to their GDP.

In this regard, more attention needs to be given to the beneficiation of minerals and other raw materials.

Summary generated by Grammarly AI, verified and amended by author

6. The investment climate and private sector dynamics

Due to policy uncertainty, infrastructure constraints, and the private sectors limited confidence in the government's ability to deliver the required reforms that will enable economic growth, current investment levels remain weak.

Investors are hesitant to commit capital when returns on safer instruments, such as government bonds, offer risk-free and guaranteed yields of 6% or more. This crowding out effect is particularly significant for sectors like manufacturing and agriculture, where risk-adjusted returns are less certain.

For the private sector to flourish, it requires less red tape, and a clearer and more supportive regulatory environment. Delays in licensing, opaque decision-making processes and shifting policy signals deter investment. To address these challenges a streamlined regulatory regime, improved transparency, and a commitment to policy continuity is needed.

There are also concerns about South Africa's potential growth rate. A decade ago, potential growth was estimated at around 3.5%, but this figure has likely declined due to institutional decay and lost capacity. Rebuilding institutional effectiveness—particularly at the municipal and provincial levels—is essential for restoring investor confidence.

Foreign direct investment has also been impacted by perceptions of corruption, weak enforcement of contracts, and limited investor protections. South Africa must strengthen the rule of law, improve dispute resolution mechanisms, and instil confidence amongst investors so that they believe that they will have recourse to fair treatment.

To reinvigorate local investment, the government should support small, medium and micro enterprises (SMMEs), which are critical to job creation. It should take steps to improve access to finance, to simplifying tax compliance, and to tailor support programmes that will empower entrepreneurs and stimulate grassroots economic activity.

Impacting each of these interventions are the real and perceived anti-growth policies. The recently promulgated Expropriation Act being one example, where the ambiguity as to what constitutes ‘’property” and under what circumstance expropriation without compensation may occur lead antagonists to suggest that property rights are under threat. What is needed as a minimum is clearer definition; which definition should be defined collaboratively between the state, the private sector, civil society, and professionals in order to ensure that all sectors of the economy are in sync and sing from the same hymn sheet.

Such clarity will also reduce the potential for misunderstanding such as that of the current US administration who have embarked on punitive measures against South Africa based on what some infer to be a false narrative (Mbembe & Gilmore, 2025). The reality is, however, that differences in interpretation do exist.

 Summary generated by Grammarly AI, verified and amended by author

7. Trade and international relations

South Africa's external trade environment is under pressure due to the emergence of global protectionist tendencies and shifting international trade alliances. The unilaterally imposed punitive tariffs of the United States call into question the feasibility of continuing exports to them at current levels, which can have a significant impact on the economy, given that the US accounts for 8% of South African exports (Mohamed & Moloi, 2025).

Source: Stanlib in Daily Investor (15 April 2025)

Exporters will have to find new markets for their products as South African products and produce in the US will become expensive and uncompetitive. This is however not a short term solution as one market cannot be shut down today, and a new market opened tomorrow. It will take time to develop. In the interim manufacturers need to survive in the short term; the possibility of some not, is real.

Automotive exports could be particularly hard hit, posing a direct threat to this vital manufacturing sector. The auto industry supports thousands of jobs and is a major contributor to export earnings. The 25% tariff that has been imposed could be devastating for local producers, especially for small and medium enterprises that lack the capital to absorb such shocks.

Negotiations with key trade partners like the United States must be prioritised to preserve favourable terms under the African Growth and Opportunity Act (AGOA).  Potentially, up to 200,000 jobs (125,000 in automotive industry alone) (Libera, 2025) may be threatened. AGOA in 2024 accounted for about 46% of total exports to the US (Business Tech, 2025 (2)), and somewhere between 3% - 4% of total exports. Although this may appear to be a small exposure, it does have an impact downstream, because a lot of the exposure is concentrated in certain sectors such as agriculture and manufacturing – particularly motor vehicles and component parts.

One economist pointed out that many manufacturers of component parts are not large enterprises and thus do not have the balance sheet to support shocks of this magnitude. Some concessions need to be considered.

At the same time, diversification of trade partners—especially within Africa and Asia—can reduce dependence on any single market. The strategic planning in this regard should assume South Africa’s graduation out of AGOA, especially given the fractious  relationship between US and South Africa.

Regional trade also needs reform. SACU revenue sharing, as noted, is skewed and lacks transparency. South Africa effectively subsidises the budgets of its neighbours, with little reciprocal benefit. These arrangements must be re-evaluated to ensure long-term fiscal fairness and regional economic stability.

The African Continental Free Trade Area (AfCFTA) presents a unique opportunity to expand intra-African trade. However, success will depend on harmonising standards, improving logistics and investing in cross-border systems and infrastructure. In order for South Africa to position itself as a regional trade hub, it should play a leadership role in operationalising AfCFTA.

 Summary generated by Grammarly AI, verified and amended by author

8. Social Considerations: Welfare, consumption and human capital

Social grants support millions of South Africans and serve as an important consumption driver. However, this model is not sustainable in the long term. With only a small proportion of the population paying income tax, the balance between support and dependency must be carefully managed.

Consumer spending has historically driven economic growth, but this trend is weakening due to wages that have been stagnating and persisting inflationary pressures. The recent introduction of the two-pot pension system, which allows partial early withdrawals, offers short-term liquidity but may undermine long-term savings.

Investing in human capital is paramount. The educational outcomes we now have in the public schooling system are quite unsatisfactory. According to one of the world’s leading development economists and specialist on education reform, Professor Lant Pritchett, South Africa is the single biggest learning underperformer relative to GDP per capita among low and middle income countries. In short, we get extremely poor education outcomes despite our high levels of public expenditure (Schirmer, 2023).  

Education must be re-imagined and vocational training must be aligned with market needs. Programmes that promote entrepreneurship, digital literacy, and technical skills that can empower citizens to contribute productively to the economy, must be rolled-out.

Healthcare is another key pillar of human development. The proposed National Health Insurance (NHI) aims to provide universal access but faces funding, infrastructure, and administrative hurdles. A phased, consultative approach is necessary to ensure that healthcare reforms are inclusive and fiscally sustainable.

9. Institutional capacity, integrity and governance

Poor governance and corruption have been a recurring themes in South Africa's economic stagnation. State capture has significantly eroded institutional integrity, and has affected everything from procurement processes to service delivery. Rebuilding trust requires transparent governance, accountability, and a capable public sector.

That is, however, only part of the story. The reality is that we have been in as low growth economy for decades – we have an institutional problem, and constraints.

The first part of the constraint has the infrastructure SOEs, Transnet, Eskom, the water boards, etcetera, which are in disarray. Their roles in lifting growth by investing and driving infrastructure are not that strong anymore. And the breakdown of infrastructure has also driven up inflation, prices, the cost of living and the cost of doing business; and it has eroded savings. It has a deterring effect, or at least threatens to deter future investment. The Reserve Bank, for example, has warned that a breakdown in infrastructure is threatening the stability of South Africa's financial system also (SARB, 2024 (2)).

Municipal governments, which are key to local economic development, suffer from under-capacity and corruption. Reforms in municipal finance, procurement and service delivery will be crucial to achieving inclusive growth.

Improving the ease of doing business must remain a top priority. Urgent attention needs to be given to measures such as digitising licensing processes, reducing red tape, and clarifying land rights, all of which can unlock significant investment.

Civil society and the media are important watchdogs that enhance and ensure accountability. These institutions must be strengthened so as to ensure the protection of the freedom of expression and similarly, civic engagement must be encouraged, as both are vital components of a resilient democracy and economy.

10. Strategic recommendations and conclusion

South Africa's economic revival requires a multifaceted approach:

• Accelerate infrastructure implementation: Shovel-ready projects need to be expedited and public project management capacity must be improved.

• Reform revenue sharing: Revise SACU arrangements for equitable fiscal contributions and reduced dependency.

• Promote private investment: Lower barriers to entry, improve investor protection, streamline regulatory approvals and reduce the levels of red tape.

• Target key sectors: Provide targeted incentives to revive agriculture, manufacturing, energy, and construction.

• Rebuild institutions: Focus on governance, transparency, and public sector training at all levels of government.

• Diversify trade and exports: Strengthen regional and Asian trade ties to reduce vulnerability to Western protectionism.

• Support SMEs: Simplify tax compliance and provide financial support to small businesses and start-ups.

• Foster innovation and skills: Increase investment in R&D, higher education and vocational training.

• Strengthen civic institutions: Empower watchdog organisations and ensure freedom of the press and civil participation.

Conclusion

South Africa stands at a crossroads. The choices made in the next few years will determine whether the country continues on a path of stagnation or begins a journey toward inclusive and sustainable growth.

The building blocks exist: a diversified economy, a young population, and robust institutions that, though weakened, can be rebuilt and restored.

But for it to be achieved, action must be decisive and coordinated. By implementing bold reforms, investing in infrastructure and human capital, and by fostering a culture of accountability, South Africa can reclaim its position as a dynamic emerging market and a leader on the African continent.

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Trading Economics. N.d.(3). South Africa Government Debt-to-GDP. [Online] Available at: https://tradingeconomics.com/south-africa/government-debt-to-gdp#:~:text=In%20the%20long%2Dterm%2C%20the,according%20to%20our%20econometric%20models. [accessed: 15 April 2025]

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This report has been published by the Inclusive Society Institute

The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals.

Email: info@inclusivesociety.org.za

Phone: +27 (0) 21 201 1589

Web: www.inclusivesociety.org.za