South Africa’s economic story in 2025 has been one of sharp contrast, marked by a dramatic shift from uncertainty to renewed optimism. The year unfolded in two distinct halves. The first half was dominated by volatility, weak confidence, and growing pessimism, while the second half delivered stability and positive momentum, leading some analysts to declare that the country’s “lost decade” may finally be over.
Although the improvement appeared sudden, economists stress that this turnaround has been years in the making. The foundation was laid in 2021 when Finance Minister Enoch Godongwana began implementing strict fiscal consolidation measures. These efforts focused on stabilising government finances and restoring confidence in South Africa’s economic management.
A key milestone in this recovery was the Medium-Term Budget Policy Statement (MTBPS), which became a symbolic marker of the country’s turnaround. The MTBPS revealed that government debt is expected to peak at 77.9% of GDP in the current financial year, alongside a wider primary surplus and increased infrastructure investment. This progress was followed by South Africa’s first credit ratings upgrade in a decade by S&P Global, reinforcing the perception that the country is back on a more sustainable fiscal path.
The first half of 2025, however, was far from encouraging. According to Standard Bank’s Head of South African Macroeconomic Research, Dr Elna Moolman, uncertainty was driven by both global and domestic pressures. Abrupt changes to US import tariffs unsettled global markets, while locally, delays in passing the national Budget created doubts about fiscal stability. As a result, economic growth forecasts were cut from 2% to 1%, the rand experienced sharp fluctuations, and local asset values declined.
The second half of the year told a very different story. South Africa was removed from the FATF greylist, received a sovereign credit rating upgrade, and showed clear commitment to fiscal discipline as debt-to-GDP levels peaked. Economic growth forecasts were revised upward, and confidence in the country’s fundamentals strengthened despite ongoing geopolitical tensions.
Crucially, reforms under Operation Vulindlela gained momentum, particularly in electricity and logistics, with water and local government reform now added to the agenda. The Reserve Bank’s shift to a 3% inflation target, supported by interest rate cuts, has further boosted consumer spending and supported growth into 2026.
While challenges remain—especially weak private sector investment—the progress made in 2025 signals a meaningful turning point for South Africa’s economy.
