Standard Bank CEO Sim Tshabalala says uncertainty around trade and tariffs, combined with turbulence in the government of national unity (GNU), has contributed to the bank’s lower outlook on the country’s growth prospects.
He said tensions between the largest parties in the GNU had also contributed to lower prospects, together with the slow pace of the execution and rollout of structural reforms necessary to generate growth.
“Those factors, together with the other global factors, just the general slowdown in sub-Saharan Africa’s growth and the slowdown in global growth ... contributed to the change in our thinking about what the growth of South Africa was going to be,” he said.
Standard Bank, South Africa’s biggest bank by assets, said it expected real GDP growth to be 0.9% in 2025, improving to 1.3% in 2026, slower than its forecast in March — of 1.7% and 2% for 2025 and 2026, respectively. In a base scenario, the bank also expects flat interest rates and inflation to stay in the bottom range of the 3%-6% target for the rest of the year and into 2026.
The bank’s economists painted three scenarios for 2025, assessing GDP growth, average inflation, the repo rate movement, household credit and the rand/dollar exchange rate fluctuation.
The 30% tariffs are going to hit the manufacturing sector of South Africa hard. The US is a big and important trading partner; it buys a lot of South African exports, in particular auto, aluminium, gold and jewellery, and so forth.
— Sim Tshabalala, Standard Bank CEO
In a base scenario, inflation peaks at 3.43%, the repo rate stays at 7%, expected economic growth moderates to 0.93% and the exchange rate hovers around the R18 mark. In a bear scenario, however, inflation spikes to around 3.65%, the repo rate ticks upwards slightly to 7.5%, real GDP growth contracts to 0.3% and the exchange rate breaches the R19 mark.
Tshabalala warned, however, about the impact of the US tariffs on the outlook. “The turbulence around tariffs has an impact on the economy,” he said. “The 30% tariffs are going to hit the manufacturing sector of South Africa hard. The US is a big and important trading partner; it buys a lot of South African exports, in particular auto, aluminium, gold and jewellery, and so forth.”
Of South Africa’s total exports, China accounts for 11.6%, Germany 8%, and the US 7.1%. When it comes to imports, China accounts for 32.3%, Germany 8.3%, and the US 7.6%
According to the automotive business council Naamsa, South Africa’s vehicle exports to the US declined significantly in the first half of 2025 compared to the second quarter of 2024, after the US in April slapped the country’s auto exports with a 25% tariff.
Vehicle exports had fallen more than 80% since the first set of tariffs were imposed — from 16,112 to 2,875 units — in the first half of the year compared with 2024, the council said.
Weighing on the South African Reserve Bank’s decision to base future rate cuts on a 3% inflation anchor — a move that sparked a public spat between finance minister Enoch Godongwana and Reserve Bank governor Lesetja Kganyago — Tshbalala said the dissonance added to uncertainty.
He said there was no lack of clarity about the constitutional prerogative of the finance minister to set the inflation target, but there is also no debate about the instruments at the disposal of the central bank in its mandated duty to control inflation.
“To the extent there is no alignment between the fiscal authority — the minister of finance and the monetary authority, the central bank — it does create concern and confusion at two levels. The one being: on what basis are the fiscal authorities planning? The revenue service collection: are they at 4.5% or at 3%?
“That is the one issue of concern. The other issue is if you assumed 4.5% in your projection for the next year or two, and 4.5% is wrong, it should actually be 3%, then it means possibly that the monetary authority needs to be more hawkish in [setting] the interest rate.”
The Standard Bank boss, who it has been announced will be leaving in 2027, expects inflation to remain on a downward trend, based on action taken by the central bank.
In the half year to June, Standard Bank recorded headline earnings of R24bn and delivered a return on equity of 19.1%. The group’s active clients grew by 2%, while South African units delivered earnings of R11.6bn and its Africa regions contributed R9.7bn.
Tshabalala said the group was bullish about growth in West Africa. “We have been in Nigeria for more than two decades, we have lived through some significant market volatility and dislocation. We have seen through that volatility. We have been in Nigeria through thick and thin, and we make a lot of money from that business, as we do out of Ghana.”
Shaakir Salie, head of research at Aeon Investment Management, said Standard Bank’s results were strong, having achieved an ROE (return on equity) of 19.1%, their best since 2008.
“Management’s commitment to their 2026 to 2028 ROE target range of 18%-22% was a positive reassurance, especially in light of slowing net interest income growth, downward revisions in South Africa's GDP growth, and their peers communicating a more cautious outlook,” he said.
Going forward, Salie said the bank’s management was confident that strategic initiatives in African regions would pay off, citing that their margins on lending were materially higher relative to lending in South Africa.
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