Africa-Press – South-Africa. The biggest impediments to South Africa’s growth are structural and need structural reforms to overcome.
In other words, South Africa needs its trains to run and its cities to function to achieve much-needed economic growth of more than 1%.
This is feedback from Reserve Bank Governor Lesetja Kganyago, who recently spoke at the 105th annual Ordinary General Meeting of the SARB shareholders.
Kganyago explained that, despite significant resilience in the face of global uncertainty, South Africa’s economic growth is set to remain low, close to 1%.
The governor pointed out that this will continue South Africa’s stagnation trend, which has been in place for roughly a decade.
South Africa’s economy did not always grow at the low levels seen over the past decade. The country experienced a prosperous economy during the 2000s, growing at about 4% a year.
However, this growth slowed down steadily during the first half of the 2010s and has hovered at growth rates of about 1% ever since.
To explain this muted growth trend, Kganyago reiterated a point he has made several times before – the drivers of South Africa’s weak growth are mainly structural and require structural reforms.
“Put in plainer language, without economic jargon, we need the trains to run and the cities to function,” he said.
At the end of July 2025, the Reserve Bank cut its forecast for South Africa’s economic growth once again, taking it down to 1% from 1.2% just two months ago.
This was mainly due to the impact of tariffs on South African exports to the United States, which is expected to impact several key industries.
However, this lower growth projection can also be attributed to continued supply-side challenges, such as logistical inefficiencies and limited electricity generation in South Africa.
“The economy’s underlying growth trend remains low, mainly due to persistent supply-side problems, for instance in logistics,” Kganyago said in the latest Monetary Policy Committee Statement.
“Higher levels of uncertainty also seem to have affected output, with business and consumer confidence deteriorating in the first half of the year.”
However, while the country’s growth outlook for 2025 looks bleak, the governor said the Reserve Bank still expects modestly higher growth in the coming years, supported by ongoing structural reforms.
Looking beyond 2025
Old Mutual chief economist Johann Els
In his address at the Reserve Bank’s latest meeting with SARB shareholders, Kganyago said that South Africa’s growth prospects appear positive for the coming years.
“Given the reform momentum underway – perhaps best illustrated by improved electricity availability – we see some scope for better growth in the coming years,” he said.
“We also believe National Treasury’s efforts to stabilise debt can bolster confidence.”
In addition, he said South Africa’s economy is enjoying some support from lower interest rates, with the yield curve shifting lower over the past year or so.
The country is also set to reap the benefits of lower interest rates in the coming years, with the policy rate down by 125 basis points since September 2024.
“The South African economy no doubt has its vulnerabilities, but it also has strengths, and I am proud to say the SARB is one of them,” Kganyago said.
The governor’s optimism about South Africa’s growth prospects is echoed by Old Mutual’s chief economist, Johann Els.
In his recent Mid-Year Economic Outlook, Els shared that he was broadly optimistic about the South African economy.
This is due to a combination of structural reform and cyclical factors expected to lift the country’s economic output to 2.5% to 3% for the coming decade.
He explained that, in the near term, economic growth will be driven by cyclical factors, notably lower interest rates and inflation, that will push consumer spending higher.
However, he cautioned that longer-term economic growth must come from increased investment in the country and a significant reduction in structural constraints.
He said South Africa has made some good progress in this regard, with substantial improvements in the supply of electricity and the efficiency of the country’s logistics network.
Els said these reforms will increase private sector participation in the economy, leading to improved investment and economic outcomes. This will drive economic growth higher for the next decade towards an average of 2.5% to 3%.
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