GDP ticks up again…

8 December 2025 – Can South Africa maintain its recent growth momentum? How confident are small businesses about their future? Is the era of rail monopoly at an end? Why can’t the ANC pay its employees’ salaries? Why did the US invite Poland to be a part of the G20?

GDP ticks up again…

South Africa’s economy grew by 0.5% quarter-on-quarter in the third quarter. This represents the fourth consecutive quarter of growth. At the same time, the second quarter’s growth was revised higher, from 0.8% to 0.9%.

In sum, that means that the economy grew by 2.1% year-on-year, beating the 1.8% that had been expected. Coming from a low base, this represents heartening economic news for South Africa.

The recent bounce in optimism is also evidenced in the latest RMB/BER (Bureau for Economic Research) business confidence index. After two consecutive quarters of decline, the index registered a reading of 44 in Q4 2025. 44% or respondents were satisfied with prevailing business conditions, up from 39% in Q3.

Encouragingly, the data point the CRA considers the most important for South Africa to improve – gross fixed capital formation (GFCF) – rose 1.6% in Q3, ending a three-quarter decline.

However, it remains stuck at very low levels: around 14% of GDP when it ought to be around 26% to meet the global average. The improvement signals that while some fixed investment is creeping back, the private sector has not fully bought into the notion of a turnaround.

From January of this year until September, the best-performing economic sector was agriculture, forestry and fishing, delivering year-on-year growth of 19.5%. In contrast, three of the most important sectors from a labour absorption point of view continued to struggle, namely mining (-1.2%), manufacturing (-1.5%), and construction (-4.1%).

… but there are signs of trouble ahead

Other indicators are also flashing red. The small business sector continues to face headwinds. Absa’s latest Small Business Growth Index found that just 38% of small businesses surveyed believed they could survive more than a year under current pressures. Only 24% found themselves in the “confidence” or “growth” range.

Small businesses form the backbone of the economy: according to the Banking Association of South Africa, about 3 million small businesses employ around 13.4 million people of the 17 million people with jobs in South Africa.

The Transnet train still hasn’t left the station

Crucially for the mining, manufacturing, construction, and agricultural industries, the sentiment around Transnet, the state-owned logistics provider, is trending more positively. However, this optimism must be tempered with caution.

At present Transnet is moving around 160 million tonnes of rail freight per year, 30% below the peak of 226 million tonnes recorded in 2017/18. The government has set a target of 250 million tonnes by 2030.

Private sector involvement is a critical component of achieving that ambitious goal, and so freight-rail operator Traxtion’s announcement of a R3.4 billion investment last week is significant. The programme foresees R1.8 billion going to locomotives and R1.6 billion to wagons and forms part of a R5.8 billion overall investment programme.

In pursuit of first-mover advantage, Traxtion appears to be making the investment without knowing exactly how the equipment will be used. The company’s CEO, James Holley, told Business Day: “It may be that we take up the [transport] slots or that we provide maintenance with full operations to the freight owners themselves. Or it could be that we provide full maintenance leases over these trains to other train operating companies that want to take up slots.”

The positive scenario is that the Traxtion investment enables Transnet to move more freight, lowers its operational and financial stress, and kicks down the door for other private operators to move in and invest.

The downside scenario sees players such as Traxtion investing and attempting to operate as an effective competitor to Transnet, while Transnet remains the monopolistic custodian of infrastructure in policy and legislation.

In practice that would mean that Transnet – and in turn, the state – remains the entity that makes the ultimate decisions about capital allocation and who receives which rail slots. This would keep alive the possibility of inefficiency, coupled with political patronage and corruption.

The private sector is getting in position to throw Transnet a lifeline. But critically, it appears the country’s rail and trade policy framework will remain state-centred, suppressing growth and job creation over the long term.

The ANC’s slow unravelling continues

As the African National Congress (ANC) prepares to convene in Ekurhuleni for its 5th National General Council (NGC) meeting from 8 to 11 December, the party has once again found itself unable to pay the salaries of party employees – the fourth time it has happened in 2025 alone. As a result, the party has instructed its provincial structures to cover the costs of accommodation, transport and conference materials.

According to the ANC website, the NGC is the party’s second-highest decision-making body. Its purpose is to serve as a political school and to assess progress in implementing the resolutions of the prior National Conference. The party describes the NGC as “a gathering of revolutionaries” that provides “an opportunity to collectively examine how the ANC must adapt and reassert itself as the moral, intellectual, and organisational leader of the National Democratic Revolution.”

However, the party’s recurring financial woes are a symptom of its declining stature and capabilities. The NGC discussion document shows a party that is increasingly aware of its failings but unable to address them. The premier of Gauteng, Panyaza Lesufi, last week referred to the ANC as a sinking ship and warned delegates at the ANC Greater Johannesburg regional conference that the party would perish if it did not tackle corruption, unemployment, and poverty.

G20 aftershocks

President Cyril Ramaphosa’s latest address to the nation, on 30 November, can be viewed as a confidence-building exercise.

The president’s remarks dealt with the recent G20 leaders’ summit and the fractious spat with the United States (US). The purpose of the address was to shore up the ANC’s self-belief, to reinforce its perception of South Africa as a global moral superpower, and to bolster positive voter sentiment towards the ANC in the lead up to the next Local Government Elections.

It did not help mend fences with the US, however. Secretary of State Marco Rubio confirmed last week that President Trump and the US would not be inviting the South African government to participate in the G20 during their presidency, commenting: “There is a place for good faith disagreement, but not dishonesty or sabotage.”

Into 2026 and the next party leadership conference in 2027, South Africa’s international relations minister, Ronald Lamola, and his ANC colleagues will lean into the sentiment he expressed in his response to Mr Rubio: “We do not seek your approval for our path. Our path is our own, chosen by our people and guided by our sovereign laws.”

The feud with the US comes at an opportune moment for the ANC, faced as it is by continued electoral decline, voter apathy, and an inability to correct course. Through 2026 the party will attempt to use US antagonism to distract from its domestic challenges and failures.

The rhetoric between the two nations aside, as the CRA has highlighted this year the US remains open to improving the trade and diplomatic relationship. Mr Rubio wrote: “When South Africa decides it has made the tough decisions needed to fix its broken system and is ready to rejoin the family of prosperous and free nations, the US will have a seat for it at our table”.

The data support Mr Rubio’s assessment that South Africa is underperforming. Between 2012 and 2023 South Africa’s GDP growth averaged only 0.8%. Real GDP per capita was lower in 2024 than in 2007.

It is small surprise that the US invited Poland, currently not a G20 member, to attend in 2026. While the country’s GDP per capita was slightly higher than South Africa’s in 1999, it is now four times more. Poland’s unemployment rate is around 5.4% compared to South Africa’s 31.9%.