South Africa’s economy is expected to show near-zero growth in the first quarter of 2025, according to economists, as uncertainty around the national budget and global trade policies weighs on key sectors.
The forecast follows a modest 0.6% expansion in the fourth quarter of 2024, which helped the country narrowly avoid a recession. However, recent data from mining, manufacturing, and electricity production has indicated sluggish activity, with agriculture emerging as the lone bright spot.
Budget and Trade Fears Drag on Growth
Dr. Elna Moolman, Head of Macroeconomic Research at Standard Bank, cited two major factors behind the weak growth outlook: lingering doubts over South Africa’s budget and potential disruptions from shifting global trade policies.
“This uncertainty is twofold,” Moolman explained. “On one hand, there is ongoing uncertainty around U.S. trade policy and tariff changes that could materially impact global growth. At the same time, significant uncertainty around South Africa’s budget in February and March threatened to derail the government of national unity.”
While domestic fiscal concerns have eased somewhat, Moolman warned that risks remain, particularly from volatile international trade conditions.
Agriculture Bucks the Trend
Despite the broader economic slowdown, Ned Bank cautiously projects that agriculture will be the standout performer for the quarter, with an estimated 6.5% quarter-on-quarter growth.
Specialist economist Crystal Huntley noted that favorable weather conditions and positive crop estimates have supported the sector, though she acknowledged its inherent volatility.
“Agriculture is very difficult to forecast, but the production estimates from the National Crop Estimates Committee have been positive,” Huntley said. “While there are concerns in the livestock industry, we expect some positive momentum.”
Downside Risks to 2025 Growth Outlook
Economists warn that South Africa’s full-year growth forecast of 1% to 1.3% faces downside risks, particularly if global trade tensions escalate or domestic policy uncertainty resurfaces.
With key sectors struggling to gain traction, the country’s economic recovery remains fragile, leaving policymakers and businesses bracing for further challenges ahead.