South Africa Industrial Market Dynamics, Q1 2025

Following a few quarters of greater certainty, political risk in South Africa has picked up once more, and combined with global headwinds, the economic forecast has tempered. The prospect of further interest rate cuts has also abated somewhat on account of these factors, meaning consumer and business expenditure over the short term will trend sideways at best.

Unemployment remains a key constraining factor in the South African economy, and following two consecutive quarters of decline totalling 160bps, the national unemployment rate remained at 31.9% in Q1. At the end of Q4 2024 trade industry and business services created the greatest number of new full-time jobs.

CPI inflation is expected to trend relatively level in the coming months, with Oxford Economics maintaining a positive outlook despite the updated forecast of 3.8% headline inflation for the year (from 3.7% previously). A gradual increase in H2 2025 is anticipated. Regardless, interest rate cuts will likely only resume in 2026, with the latest (end March) MPC committee meeting resulting in no change to the headline rate.