It has been close to two years since the 2024 elections that saw the African National Congress (ANC) lose its seemingly unconditional grip on power, forcing the birth of the Government of National Unity (GNU) between the ANC, the main opposition Democratic Alliance (DA) and several smaller groupings. Since then, the country has seen infighting in the governing coalition as well as trade tensions with the US, with president Trump accusing South Africa of discriminating against white Afrikaners. But have economic conditions improved so far in the GNU’s time in office?
Some wins, though challenges remain: The stock exchange has rallied under the new government, with investors backing the DA to inject technocratic competence into key ministries it runs such as home affairs, agriculture and public works. Indeed, there has been some progress on key fronts. The GNU has fast-tracked Operation Vulindlela, the structural reform program designed to address power shortages and freight transport deficiencies by allowing greater private sector participation in the energy and logistics sectors.
Eskom, the much-maligned state utility firm, recently returned to profitability for the first time in eight years. Scheduled blackouts have ended, while solar and wind power are booming. However, ideological battles over health insurance and Black Economic Empowerment (BEE) quotas continue to spook investors; for instance, BEE quotas are a reason for South Africa being one of few African countries to lack satellite internet from US firm SpaceX.
South Africa’s recent economic performance: The numbers are modest but moving in the right direction. After average growth of just 0.7% in 2015–2024, the economy likely expanded 1.2 percent last year. The agricultural sector, buoyed by improved port operations and favourable weather, likely grew by double digits in 2025. Tourism numbers have finally eclipsed pre-pandemic levels, aided by long-overdue visa reforms. However, the unemployment rate is still among the world’s highest, and GDP per capita is still declining.
Trade Tensions Between South Africa and Trump: Since August 2025 the U.S. has imposed a 30 percent tariff on selected South African goods, in an effort to pressure South Africa to review its policies aimed at addressing racial inequality, as well as to push it to align more closely with the US on foreign policy. Trump recently threatened to slap an extra 25 percent levy on South African goods in response to South Africa’s trade with Iran. That said, exports have so far remained robust, with vehicle exports up by around a quarter in January–November last year.
South Africa’s economic outlook: The Consensus among our panel of expert analysts is for South Africa’s GDP growth to accelerate to 1.5 percent this year, the fastest since 2022. However, this rate will still be less than half the sub-Saharan Africa average and merely in line with population growth, meaning in per person terms the country won’t get any richer. GDP growth should accelerate further in the longer term as energy and transport reforms bear fruit, while remaining low by continental standards. In short, South Africa is undeniably in a better place than the dark (quite literally, given the frequent lack of electricity) days of 2023. But the country still has a long road ahead.
Insight from our panelists:
On the outlook, EIU analysts said: “The 35.3 percent year-on-year increase in foreign visitor arrivals in October suggests that tourism will continue its outperformance in 2026-30, offsetting weaknesses elsewhere in the national accounts. Retail sales are reasonably strong, up by 3.8 percent year on year in the third quarter, indicating that private consumption growth will be stronger than headline GDP growth throughout the forecast period, over time helping South Africa to whittle down its still very high ranks of unemployed workers. The implementation of economic reforms by the centrist coalition government is showing results in improved power availability—reducing a major bottleneck for mining, manufacturing and services—and plans for private-sector involvement in freight rail will also support an acceleration of economic growth in the forecast period.”
