Nedbank expects SA’s economy to record a pedestrian 1% growth this year, well below population growth as structural obstacles weigh on the economy.
The group on Tuesday said it had cut its SA growth forecast for this year, after poor first-quarter data that showed the economy expanded by a marginal 0.1% compared with the fourth quarter of 2024.
Agriculture kept the economy afloat in the first quarter after a 15.8% surge in output, offsetting weaknesses in mining and manufacturing.
Nedbank said shrinking fixed investment, a weaker net trade position and SA’s structural inefficiencies were a drag on economic growth.
“Economic activity is, however, expected to gain modest upward traction in the quarters ahead, driven mostly by consumer demand, underpinned by rising real incomes, subdued inflation and lower interest rates,” the lender said.
“Upside may continue to be capped by sluggish fixed investment due to fragile business confidence amid fading global growth, persistent policy uncertainty and ongoing structural obstacles. We now expect GDP to grow by only 1.0% in 2025, revised down from 1.4% in February 2025.”
Nedbank’s prospects are intractably linked with those of SA from where it derives a large portion of its revenue.
According to the group’s annual report, the company’s SA franchise contributed 90% of the group’s R1.4-trillion of assets and 79% of R16.9bn headline earnings in financial year 2024.
The group operates in six countries in Sadc through subsidiaries and banks in Lesotho, Mozambique, Namibia, Eswatini and Zimbabwe. It also has a representative office in Kenya, East Africa’s economic powerhouse.
Earlier in the year, Nedbank had said it expected better growth in SA this year as its baseline scenario, which highlighted a better environment for the company and its clients compared with the past 10 years.
According to the lender’s base case scenario, “GDP growth gathers pace from 2025 given less severe load-shedding and smoother logistics, but growth remains below 2% for the next three years”.
Nedbank expects the SA Reserve Bank monetary policy committee (MPC) to cut interest rates by another 25 basis points (bps) when it meets next month.
The MPC in May reduced interest rates by 25bps, with five members backing the 25bps cut, while one preferred a cut of 50bps.
“On the back of a subdued inflation outlook, the [Bank’s] MPC reduced interest rates by a cumulative 50bps in the first half of 2025. We expect inflation to average 3.4% in 2025, providing the MPC with space for further monetary easing,” Nedbank said.
“As a result, we forecast one more 25bps rate cut in July 2025, taking the prime lending rate down to 10.5%. Thereafter, interest rates will likely remain steady.”
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