With the state of the nation address (Sona) behind us, attention now turns to the budget speech on February 19, in which finance minister Enoch Godongwana is expected to provide fiscal clarity on some of the issues raised by the president.
“Execution risks remain key,” said Andre Cilliers, currency strategist at TreasuryOne, as markets assess the government’s ability to implement the president’s policy commitments made during the ’ first government of national unity (GNU) address on Thursday.
Ramaphosa’s speech centred on local government failures and the medium-term development plan (MTDP) aimed at accelerating GDP growth.
“MTDP targets GDP growth of 2%-5.4% by 2029, excluding controversial NHI reforms — a notable shift signalling fiscal realism,” said Cilliers.
In the lead-up to budget day, several institutions — including PwC, Old Mutual and Standard Bank — will release their economic outlook this week, setting the stage for expectations about fiscal policy, spending priorities and economic reforms.
On Tuesday, Stats SA will publish manufacturing production data, followed by mining production figures on Thursday.
“These releases will give us our first ‘complete’ set of data for the fourth quarter,” said Tracey-Lee Solomon from the Bureau for Economic Research (BER).
Solomon said mining and manufacturing contributed positively to GDP in the third quarter, but showed signs of weakness in November, with both sectors contracting on a monthly basis.
The CEC data is likely to confirm that SA had one of the poorest seasons in 2023/24
— Wandile Sihlobo, Agbiz
Nedbank economists expect manufacturing production to have likely contracted by 1.7% year on year in December, after a decline of 2.6% in November.
“Despite the absence of load-shedding, the sector still contends with high operating costs, eroding its competitiveness. These struggles are reflected in the weak PMI outcomes,” the economists said in a note.
“A decline in the December Absa purchasing managers’ index (PMI) suggests that manufacturing production could see a further downtick in December,” Solomon said.
Last week, the BER reported that SA’s manufacturing sector began 2025 on a weak footing with the Absa PMI falling by 0.9 points to 45.3 in January, reinforcing concerns over the sector’s sluggish recovery.
Nedbank forecasts mining production to grow by 0.8% year on year, after a decline of 0.9% in the previous month.
“Base effects and somewhat better operating conditions will support a modest recovery in mining production,” the bank’s economists said.
On Thursday, the crop estimates committee (CEC) will release its finalised crop data on the 2023/24 summer crops.
“The CEC data is likely to confirm that SA had one of the poorest seasons in 2023/24, with overall summer grain and oilseed production down by 23% year on year at 15.4-million tonnes,” said Wandile Sihlobo, chief economist of the Agricultural Business Chamber of SA (Agbiz).
“This is a result of the midsummer drought. Much of this has already been priced in the market, and our focus is now on the new season crop. We believe the current season will be a recovery period from the poor harvest or 2023/24 season.”
Meanwhile, on Friday, the US nonfarm payrolls or jobs report showed that jobs rose by 143,000 in January, which was less than market expectations for an increase of 175,000.
The US jobs data is important to SA because it serves as a key indicator of US economic health, influencing global investor sentiment, financial markets and capital flows, which can affect the rand exchange rate, SA exports, and local interest rates through changes in Federal Reserve policy.
“Overall, the January 2025 employment report was solid, suggesting ongoing strength in the US labour market. However, the monthly acceleration in wage growth will add to the US Federal Reserve’s current list of concerns regarding the elevated level of US inflation,” Stanlib chief economist Kevin Lings said.
“The key downside risk to the US economic outlook remains the introduction of widespread import tariffs by the Trump administration that would create a supply shock, weaken economic activity and push inflation higher,” he said.
On Friday, Reuters reported that US President Donald Trump would announce reciprocal tariffs on many countries by Tuesday — a major escalation of his efforts to reshape global trade relationships in the US’s favour. Trump did not specify which countries would be affected.
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