South Africa’s economy is estimated to grow 1.3% in 2025, up from 0.6% in 2024, according to the World Bank’s latest “Global Economic Prospects” report this week.
The country is also forecast to grow 1.4% in 2026 and 1.5% in 2027.
According to the World Bank, the anticipated improvement in 2025 was driven by “a more reliable electricity supply, a bumper agricultural harvest and a pickup in business confidence”.
The uptick in South Africa’s performance comes as overall growth in Sub-Saharan Africa rose to 4% in 2025, with regional output expected to accelerate further to 4.3% in 2026 and 4.7% in 2027.
However, this remains well below the region’s historical average and insufficient to meaningfully reduce extreme poverty, the Bank cautions.
Among Africa’s three largest economies, Nigeria led with 4.2% growth in 2025, supported by “finance and information and communication technology and a modest recovery in agriculture”, while Ethiopia’s growth decelerated to 7.2% from 8.1% in 2024.
Headline inflation across the Sub-Saharan Africa region has eased, thanks to lower global food and energy prices, but core inflation rose for the first time in two years, prompting some central banks to pause rate cuts.
The South African Reserve Bank is anticipated to extend its easing cycle this year, after inflation expectations dropped further in the fourth quarter, signalling growing confidence in the Bank’s 3% inflation target.
Global trade risks
The World Bank warns that South Africa’s exposure to global trade risks remains elevated. While most Sub-Saharan African economies face limited fallout from trade fragmentation, South Africa is among a handful of exceptions — alongside Ivory Coast, Kenya and others — due to its reliance on US markets for goods and commodity exports.
“The baseline projections assume that current levels of bilateral tariffs remain in place throughout the forecast horizon,” the World Bank said. US President Donald Trump’s administration imposed 30% “reciprocal” tariffs on key South African exports.
“However, the expiration of the US’ African Growth and Opportunity Act (Agoa) in late 2025 — which ended preferential access to the US market for eligible African countries — is expected to have a significant impact on some economies unless extended,” the World Bank said.
The House of Representatives passed the Agoa extension bill on Monday with overwhelming bipartisan support (340 votes in favour and 54 against), sending it to the US Senate before going to Trump for approval. The proposed renewal would extend preferential trade access to December 31 2028.
Yet, the bill in its current form leaves South Africa’s continued eligibility open to interpretation and possible future amendment — a point of concern for local exporters, particularly in the vehicle, citrus and wine sectors, which have benefited significantly from Agoa access before the 30% tariffs kicked in.
Relations between the US and South Africa have been strained in recent months. US trade representative Jamieson Greer has described South Africa as a “unique problem” for the US, citing unresolved tariff and regulatory barriers.
More recently, US senate foreign relations committee chair Jim Risch called South Africa an “adversary”, accusing it of showing “open hostility” toward the US by conducting joint naval exercises with Iran, Russia and China.
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