World Bank Upgrades South Africa’s 2025 Growth Outlook to 1.8%

The World Bank has revised its economic growth projection for South Africa, raising its 2025 estimate from 1.6% to 1.8%. This adjustment comes amid improvements in the country’s energy and logistics sectors, driven by ongoing structural reforms initiated by the government.

According to the latest South Africa Economic Update released on Tuesday, the World Bank anticipates further growth, with GDP expected to reach 2.0% by 2027—an upward revision of 0.4 percentage points.

“Such a trajectory is based on continued political stability and sustained progress in providing power and freight transport services, building on the structural reforms currently implemented by the government in these two sectors,” the World Bank stated.

In addition to economic expansion, inflationary pressures are expected to ease in the coming months. This could pave the way for the South African Reserve Bank (SARB) to introduce further interest rate cuts, potentially stimulating lending and economic activity. The central bank recently reduced its primary lending rate by 25 basis points to 7.5%, with inflation remaining within its target range of 3% to 6%.

However, despite these improvements, the World Bank warned that the current growth levels would not be sufficient to significantly curb South Africa’s high poverty and unemployment rates.

“A 1% increase in GDP growth is expected to generate only 30,000 to 50,000 jobs due to the low employment elasticity to GDP growth in South Africa,” the bank noted.

With poverty and unemployment levels projected to remain above 60% and 30%, respectively, economic challenges persist. While the reforms have yielded positive results, the broader question remains—will these changes be enough to drive long-term, inclusive growth?