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You can also listen to this podcast on iono.fm here.<\/p>\n
JIMMY MOYAHA: South Africa\u2019s GDP data was released this morning [Tuesday 10 March], data that points to a year-on-year growth of 1.1% in South Africa\u2019s economy. We\u2019re going to look at this and reflect on this number in more detail with the chief economist at Citadel Investment Services, Maarten Ackerman. He joins me on the line now to see what we make of these numbers.<\/p>\n
Maarten, lovely having you on the show, as always. Thanks so much for taking the time. Any surprises from a GDP perspective? I imagine as South Africa we guided for some of these numbers throughout the year, and it helps that we review them on a quarter-on-quarter basis. But any surprises as to where we closed out the year for 2025?<\/p>\n
MAARTEN ACKERMAN: No, not really. I think the fourth quarter was pretty much in line with expectation and, like you said, for the year we printed 1.1%.<\/p>\n
That\u2019s a better number than in the last three years. But it\u2019s all relative because 1.1% is still a very bad number.<\/p>\n
If you compare that to the growth in the population, which is about 1.5%, it means that we add more people every year to the economy than goods and services and, while that\u2019s the case, we\u2019re in a per capita recession.<\/p>\n
So although the number is better than what we\u2019ve seen of late, it\u2019s still not where we want it to be. But we are hopeful.<\/p>\n
There are some positive signs that we can build on and then in time probably deliver better results.<\/p>\n
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JIMMY MOYAHA: Maarten, what continues to constrain our economy? We happened to get a couple of things right towards the tail end of 2025, [from] the likes of coming off the grey list to the likes of having improved sentiment come our way. Yes, some of those factors might take a bit longer to filter into numbers like the GDP and the measurement of the economy, but every single time we have this conversation around the growth of the economy, we seem to be lagging behind these expectations. Where do our bottlenecks still sit?<\/p>\n
MAARTEN ACKERMAN: It\u2019s the same old story about the logistics more recently the water supply, electricity, rail, harbours \u2013 so everything that puts a cap on how productive we can be with what we\u2019ve got in terms of exporting.<\/p>\n
Last year we had the commodity boom. We exported a lot. It helped a lot. Obviously we saw that in the budget, but we could probably have done more if we hadn\u2019t had those bottlenecks in terms of exporting more of those kinds of commodities that were demanded globally. So that\u2019s still the issue.<\/p>\n
You are 100% right that we need time to resolve that.<\/p>\n
The ease of doing business is another thing that makes it quite difficult to do business.<\/p>\n
And if you look at the numbers, last year agriculture and financial services were the two main contributors to the annual growth. Now, this economy can\u2019t really grow firing on only two cylinders, especially if most of it is coming from agriculture.<\/p>\n
Agriculture is fast growing. It is resilient, but it\u2019s a small part of the economy.<\/p>\n
So we don\u2019t see growth yet in mining and in manufacturing, which are so important. And construction. In some of the quarters we had positive numbers, but for the year we\u2019re still down. They are really facing some of those structural issues and it\u2019s only when we\u2019re going to turn that around in those sectors where we are going to see higher and more sustainable growth, because they are also the kind of industries that can create jobs for the skill base that we have in South Africa.<\/p>\n
JIMMY MOYAHA: Speaking of that skill base in South Africa, Maarten, I want to take a look at the domestic factors. You touched on the fact that increasing exports is always a good thing from a business perspective. I want to zoom in on the local market and get a sense \u2013 perhaps from a growth perspective \u2013 what needs to start to happen there for us to be able to really benefit from a stronger local economy and, by extension, a stronger GDP number.<\/p>\n
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MAARTEN ACKERMAN: From the local market we need to remove some of the red tape. If you think about the budget, they\u2019ve lifted the Vat registration from R1\u00a0million to R2-point-something million.<\/p>\n
A lot of people ask \u2018But will that really make a difference?\u2019 Yes, it will make a big difference because your economy really grows on the ground through small businesses.<\/p>\n
It\u2019s very difficult for a big, big mining company to grow exponentially and add significant jobs. Your multiplier is sitting in the small businesses.<\/p>\n
Now, if a small business needs to spend most of its admin time focusing on registering for and paying Vat and running all those systems, it takes one\u2019s eye off the ball. So those small things that the government is implementing make a huge difference. But again, you won\u2019t see the results now; it will take time.<\/p>\n
In today\u2019s print as well we\u2019ve seen another quarter of very strong growth [in] fixed capital formation. That\u2019s basically reinvesting back into the economy. About 70% of that number was driven by the private sector. The crowding in the private sector \u2013 trying to rebuild capacity \u2013 is the first step, really.<\/p>\n
We need to rebuild what we\u2019ve lost over the last call it 15 years before we\u2019re going to see higher growth than 1%.<\/p>\n
So if you look at the 1.1% growth number, it shouldn\u2019t really be a surprise, given that our fixed capital formation as a percentage of GDP is sitting at 14%, whereas it should be about 30% according to the National Development Plan.<\/p>\n
So we need to focus on rebuilding capacity before we can really hope for or see any high economic numbers.<\/p>\n
JIMMY MOYAHA: Maarten, before I let you go, I want to get your thoughts on where we go from here. We know that globally the risk sentiment that exists out there in the market has had global estimates revised down, including global growth, and has had inflation globally revised up. We know that locally that would have an impact on how our Monetary Policy Committee reviews the risk associated with the South African economy.<\/p>\n
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Does this mean we are no longer going to get interest rate cuts? Where do we stand on that, and what does that mean for our economy going into the new year?<\/p>\n
MAARTEN ACKERMAN: I think everyone\u2019s been quite hopeful that we\u2019ll see further rate cuts and now, with what\u2019s going on in the Middle East, there is still a lot of uncertainty.<\/p>\n
It all depends on how long this continues and how long the oil price remains quite elevated. But if that scenario plays out we are definitely going to see upward pressure on inflation.<\/p>\n
Oil is our biggest import item. The rand is slipping under these conditions. So that means it\u2019s very difficult for the Reserve Bank to commit to those rate cuts that we expected.<\/p>\n
In fact, we might actually see a rate hike in that kind of environment, which is bad news for economic growth as well.<\/p>\n
So yes, there\u2019s still a lot of uncertainty. Yesterday the Reserve Bank said they are reassessing; we will see what comes out there. But I think rate cuts are off the table for now.<\/p>\n
JIMMY MOYAHA: Rate cuts might be off the table, growth not looking as we expected it to, but there might still be green shoots in the South African story \u2013 and we might still be able to achieve them.<\/p>\n
We\u2019ll see how the new year plays out as we continue to go into 2026. For now we\u2019ll leave this conversation on that note. Thanks so much to the chief economist at Citadel Investment Services, Maarten Ackerman, for joining us to look at GDP numbers.<\/p>\n
#SAs #economy #grew<\/p>\n","protected":false},"excerpt":{"rendered":"
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