Growth Without Momentum, South Africa at an Economic Crossroads…

As markets awaited Statistics South Africa’s third‑quarter GDP print, the rand’s subdued trade signalled a familiar unease: growth that exists, but lacks the vigour to transform lives and close deep structural divides. Early trading around R17.10 to the dollar and a modest decline in the 2025 government bond yield captured a moment of calm that conceals mounting economic stresses. Economists’ forecasts — roughly 0.4–0.5% quarter‑on‑quarter expansion — point to continuity rather than recovery, and continuity is not enough.

Why Growth is Stalling: Accumulated Shocks and Structural Failures

The expected slowdown is not the result of a single event but the accumulation of shocks and long‑standing structural failures. Recent years have delivered repeated blows:

- Load‑shedding and energy insecurity: Persistent failures at Eskom and rolling blackouts have shredded productive time across manufacturing, mining, retail and services, raised operating costs through backup generation and discouraged investment. The proposed unbundling of Eskom and plans for increased private‑sector generation have been steps in the right direction, but implementation has been slow and uneven.

- The COVID‑19 shock and weak recovery: The pandemic precipitated a deep output contraction and long‑lasting labour‑market scarring. Jobless rates remained obstinately high after the crisis, with many households slipping into longer‑term poverty despite fiscal relief measures.

- Fiscal strain and constrained public investment: Rising public debt and limited fiscal headroom have forced prioritisation of recurrent spending over capital maintenance. Sovereign‑rating pressures and higher borrowing costs narrowed the state’s ability to scale infrastructure investment when it was most needed.

- Infrastructure decay and logistics bottlenecks: Ageing transport corridors, congested ports and unreliable rail networks have increased logistics costs and eroded competitiveness for exports and domestic trade alike.

- Crime, corruption and governance weaknesses: High levels of violent and organised crime, coupled with corruption scandals and governance lapses in some state entities, have deterred investors and weakened state capacity to deliver public goods efficiently.

- Global headwinds and trade barriers: Rising protectionism, elevated global interest rates in recent cycles and higher tariffs in key markets have tightened external demand for South African exports and made capital more expensive.

How Policy Responses Helped — and Where they Fell Short

Government, the Reserve Bank and other actors have not been idle, but many responses were either insufficiently bold or too slow:

- Monetary policy: The South African Reserve Bank’s tightening cycles to tame global and domestic inflation helped stabilise the currency at times but also raised borrowing costs for business and households, constraining demand and investment.

- Fiscal measures and relief programmes: Emergency fiscal support during the pandemic and limited social grants mitigated immediate hardship, but fiscal consolidation and debt servicing obligations limited the scope for sustained capital spending and broader stimulus.

- Eskom reforms: Proposals to unbundle Eskom, encourage independent power producers and fast‑track private power procurement represented necessary reform. In practice, regulatory delays, procurement complexity and political sensitivities slowed progress, prolonging energy insecurity.

- Anti‑corruption and governance efforts: High‑profile prosecutions and commissions of inquiry shone a light on malfeasance, but weak enforcement in some quarters and slow accountability diluted their long‑term deterrent effect and undermined investor confidence.

- Trade and industrial policy: Export promotion and incentives have had localized successes, but structural cost disadvantages — logistics, electricity and labour market rigidities — continued to blunt competitiveness.

The Human Cost Behind the Numbers

The macro picture masks individual suffering: persistently high unemployment (especially among youth), shrinking real incomes for many households, business closures, and curtailed public services where maintenance was deferred. The gap between GDP headlines and everyday reality remains stark.

A sharper, Coordinated National Strategy — What Must be Done

Incremental fixes will not suffice. The policy agenda must be accelerated and coordinated:

1. Energy: Fast‑track pragmatic, transparent procurement of dispatchable and renewable generation; modernize grid management; accelerate private‑sector participation while protecting vulnerable consumers.

2. Infrastructure: Prioritise maintenance and targeted modernization of ports, rail and roads; establish ring‑fenced capital programmes financed through public‑private partnerships and conditional debt instruments.

3. Fiscal credibility and targeted investment: Protect and expand capital budgets for growth‑enhancing projects while continuing credible fiscal consolidation to preserve market confidence.

4. Crime and governance: Intensify anti‑corruption enforcement, strengthen corporate governance, and build rapid‑response units for crimes that choke the economy (theft, illegal mining, contract fraud).

5. Labour, skills and competitiveness: Reform regulations to increase flexibility, expand vocational training and apprenticeships, and incentivise private investment in upskilling.

6. Trade and industrial strategy: Pursue active trade diplomacy, diversify export markets, and support firms to move up value chains through incentives for capital‑intensive, high‑productivity investments.

7. Financial sector stability and credit access: Encourage banks and development finance institutions to de‑risk and scale lending for productive investment, supported by credit guarantees and blended finance where necessary.

8. Social protections: Scale targeted social programmes that reduce poverty traps while linking beneficiaries to training and job opportunities.

Conclusion — Choice and Urgency

Softer quarterly growth should be a clarion call, not comfort. South Africa faces a choice between losing another decade to halting, incremental responses or seizing the moment to implement decisive reforms that restore momentum, lower costs and open pathways to inclusive growth. That requires political courage, consensus across labour, business and civil society, and a relentless focus on execution. The country’s future prosperity — and social cohesion — depends on which path it chooses.