Economist Jeff Gable Weighs In on Growth, Risks, and Global Trade Pressures
Johannesburg – Jeff Gable, Chief Economist at ABSA, offered a candid overview of South Africa’s economic outlook during a recent Chamber of Commerce webinar, covering everything from power supply challenges to volatile global trade relations and tax tensions at home.
Gable began by noting that optimism surrounding South Africa’s economic recovery – bolstered by reduced load shedding and a surprisingly constructive Government of National Unity post-elections – has recently given way to a more complex reality. ABSA had forecasted GDP growth of up to 2.2% for 2025, potentially the strongest since the pre-COVID period, but several headwinds are now tempering expectations.
Business Confidence Stalls
For over a decade, South African businesses have remained largely pessimistic. While 2023 saw a gradual uptick in confidence, Q1 of 2025 has shown no further improvement. Gable pointed to policy uncertainty as a major concern – once cited by 90% of manufacturers as a key issue, it briefly eased following the formation of the unity government, only to rise again.
Power Grid Woes Resurface
South Africa’s long-standing electricity challenges persist. After a 10-month reprieve from load shedding, energy availability has stagnated at around 56-57%. Moreover, the country is increasingly relying on expensive open-cycle gas turbines – an emergency measure never intended for baseline energy supply. “That’s a strong indication something in the system isn’t working well,” Gable remarked.
US Trade Tariffs Cloud Export Outlook
South Africa now faces serious risks from newly proposed US reciprocal tariffs. Under a simplified formula criticized for its arbitrariness, the US has flagged South Africa for running a significant trade surplus – $9 billion according to US figures – potentially triggering tariffs as high as 30%.
This is particularly alarming for sectors such as precious metals, autos, and marine exports, which make up a large portion of South African trade with the US. “What’s most damaging is the uncertainty,” Gable said. “Firms don’t know what to ship or under what terms it will land in the US.”
Fiscal Chaos Adds to Uncertainty
Domestically, the budget process – usually a predictable affair – turned chaotic when the finance minister’s speech was pulled minutes before delivery. The key point of contention: a proposed VAT hike from 15% to 17%. Following backlash, this was scaled down to a 0.5% increase, but the political instability spooked markets and stakeholders alike.
Reform Momentum in Energy, Transport
Some of the most tangible gains have come from South Africa’s infrastructure reform agenda. In the electricity sector, the state utility Eskom still struggles, but private sector participation – particularly in renewables – has expanded significantly. Progress toward de-verticalizing the grid continues, laying the foundation for eventual competition in energy transmission and generation.
In transport, there are similarly promising signs. Durban’s congested Pier 2 container terminal has attracted a global private operator, though legal delays persist. Meanwhile, the government has begun the process of opening up key freight corridors to private involvement. These changes are slow-moving, but they represent a shift that could help modernize South Africa’s failing logistics network.
Inflation Cools, Markets Look to Rate Cuts
On the macroeconomic front, inflation data has turned from foe to friend. Consumer prices in South Africa are now broadly within or below the Reserve Bank’s target range. This gives the central bank space to ease interest rates, and markets are beginning to price in cuts of 50–75 basis points by the end of the year.
Just weeks ago, post-election uncertainty had wiped out expectations for any easing. That sentiment is now reversing, offering potential relief to both households and businesses.
Consumers Set for a Quiet Rebound
South African consumers, burdened by years of floating-rate debt, may finally be catching a break. Because most borrowing in the country is linked to the prime rate, any cut in the policy rate translates directly into lower monthly repayments.
Crucially, household income growth has outpaced interest costs over the past eight years. A borrower who bought a home in 2016 is now paying only 9% more in rand terms on their bond, while income has risen nearly 70%. Even those who bought homes more recently are beginning to see pressure ease.
Added to this, a new pension withdrawal mechanism introduced in late 2023 has quietly injected liquidity into the economy. From September through February, South Africans withdrew R45 billion – mostly by younger, lower-income earners. The government expects another wave of withdrawals in March and April, with much of the money reportedly being used to pay down debt or fund essential spending.
Commodities and Currency: A Global Assist
Global markets, meanwhile, have given South Africa an unexpected tailwind. Amid international uncertainty – driven partly by the geopolitical posture of the US administration – gold and platinum prices have risen sharply. Coal, another major export, has softened, but not nearly as much as oil, South Africa’s largest import. The result: a net gain in the country’s terms of trade.
This backdrop supports the rand, which ABSA forecasts to end 2024 stronger against the pound, at around R23.70. The currency remains undervalued on a purchasing power basis, with relatively little foreign investment left to pull out – a dynamic that could work in its favour.
Growth vs Jobs: The Numbers That Matter
Despite all this, the structural problem remains: South Africa’s economy hasn’t grown fast enough to create jobs. Over the past decade, GDP growth has averaged just 0.75% – barely enough to keep up with population growth, let alone reduce unemployment.
ABSA estimates that growth of at least 1.5% is needed to stabilise employment levels. To see meaningful job creation, the economy needs to grow by 2% or more. The golden years of 4%-plus growth in the early 2000s created up to half a million jobs annually. That’s the benchmark, but reaching it will require a sustained investment boom – and for that, confidence is critical.
A Resilient but Restless Economy
South Africa’s economy has not crashed – it has stagnated. Real GDP per capita is lower today than it was 15 years ago. But it is precisely this slow, grinding trajectory that creates space for resilience. No bubbles, no busts – just slow, incremental decline, with flickers of hope.
That hope now lies in reform, inflation relief, improving terms of trade, and a slowly stabilising political consensus. If these hold, the next phase – one of recovery and investment – could be within reach. But as Jeff Gable put it, don’t expect it by next Wednesday.
For now, South Africa continues to live out one of its most telling idioms:
“’n Boer maak ’n plan” – A farmer makes a plan.
It’s not elegant, but it’s pragmatic – and, for now, it may be enough.
A Path Forward?
Gable emphasized the importance of swift diplomatic engagement with the US and greater momentum behind the African Continental Free Trade Area (AfCFTA). But, he warned, these are long-term solutions.
In summary, Gable’s message was one of cautious realism: while South Africa has shown resilience and pockets of reform, sustained growth will require greater political stability, clear trade strategies, and reliable energy infrastructure.
“It’s never easy,” Gable commented. “But the opportunities remain – if we can navigate the risks.”
Watch the replay:
