Gold shot the lights out this year, while the rand became stronger towards the end of the year, trading at R16.63 this afternoon compared to R18.88/$ on 1 January.
As we count the last hours of 2025, South Africans are wondering if 2025 was a better year for the economy than 2024 was and whether 2026 will be the year when the economy will start performing as economists wish for, especially since the gold price reached record highs and the rand stabilised.
Gold started the year on $2 624.38 per fine ounce and reached $4,393.76 this afternoon. The price of gold increased by 10% just in the past month and by almost 70% since the beginning of the year.
After Covid, we thought our economy would pick up and shake off the past few years’ sluggish economic growth. We struggled through 2020, 2021 and 2023 to overcome the constraints of lockdown. Then came 2024: Covid has become one of the flu variants; logistics picked up globally, but now there was a shortage of staples due to the war in Ukraine.
All through 2024, we balanced good news about what can be in store for our economy while trying not to panic about what the new president in the White (Gold) House would have in store for world trade and South Africa in particular, especially regarding the African Growth and Opportunity Act (Agoa).
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New Year’s fireworks in 2024: a sign of a year with a burnt-out economy
As fireworks streaked the skies across South Africa at the end of 2024, little did we know what would wait in 2025: a Budget that was postponed twice due to a disagreement on Vat, the rand decreasing due to the issues with Budget 2025, the closure of ArcelorMittal, shedding thousands of jobs, the lowest inflation in five years and South Africa being removed from the Financial Action Task Force (FATF) grey list.
Then, Trump’s tariffs were announced and eventually implemented despite various delegations hitting the road to Washington for and against the tariffs. The US administration’s aversion to South Africa became so bad that US President Donald Trump refused to attend the G20 that was held in South Africa towards the end of November.
In South Africa, 2024 was also the year when the country’s first Government of National Unity (GNU) was sworn in. With the elation came the warnings that a break in the GNU’s unity could damage the economy. Thankfully, it held, although the GNU also caused the biggest economic calamity of the year.
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The big stink of the year: Budget 2025 postponed not once, but twice
While MPs were sitting ready in parliament and journalists waited to inform their audiences of what Budget 2025 would bring, we waited… and waited… for the Minister of Finance, Enoch Godongwana, to come and deliver Budget 2025.
Then came the shocking announcement: Budget 2025 was postponed because all the parties in the GNU did not agree that Vat should be increased by 2% to make up the budget shortfall. For the first time in South African history, the Budget was not delivered on the day pencilled in on parliament’s calendar. After one more postponement, the budget was passed, without a Vat increase.
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SA ended 2025 in stronger position for economy than year before
Prof Raymond Parsons, an economist at the NWU Business School, says the South African economy ended 2025 in a stronger and better position than it was a year ago. “Over the past few months, a number of positive developments created what could be a turning point in the business cycle.
“Based on the latest data available, the economy enters 2026 on a ‘note of cautious optimism’ about the outlook for next year. The country has indeed been in an economic recovery phase this year, and a cumulative set of favourable factors promises better economic traction in 2026.”
Parsons says South Africa’s economic fundamentals therefore look firmer, and the groundwork for durable growth is being laid. He points out that the economy showed its fourth consecutive increase in economic activity, albeit off a low base in the third quarter.
“The gross domestic product (GDP) growth forecast for 2026 is now about 1.5%, while inflation is projected to be close to the 3% inflation target, and interest rates are expected to decline further. Energy and logistical constraints are gradually easing.”
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Increase in SA’s credit rating as well as record gold price and stronger rand
He also points out that lower inflation and easier interest rates were not the only good news. There was also the well-received Medium-Term Budget Policy Statement (MTBPS), Standard & Poor’s raising of the country’s investment rating, a record gold price, and a stronger rand.
“These are necessary conditions for much higher economic growth; they are not sufficient ones. The MTBPS projection of 1.8% average growth over the 2026-28 period, while welcome, is still too low considering South Africa’s socioeconomic challenges.
“Current SA growth forecasts remain too modest compared to other emerging markets. We must do better, especially if our growth performance could surprise on the upside. The GNU wants to see at least 3.5% GDP growth by 2030, driven by consumer spending and fixed investment.
“Fixed capital investment as a growth driver in particular must be a much higher proportion of GDP. Boosting investor confidence is now the main key to unlocking higher job-rich growth. The welcome ‘green shoots’ of economic recovery that were apparent in 2025 therefore require to be nurtured in the year ahead.
“Major capacity challenges in South Africa still require to be met at various levels to further support growth. South Africa must also shake off its reputation for high crime levels.”
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Moody’s sees progress for SA economy in 2026, while Standard Bank sees a stable rand
According to credit ratings agency Moody’s, real GDP growth in South Africa (Ba2 stable) averaged less than 1% annually over the past decade, amid persistently weak fixed investment and structural unemployment.
However, Moody’s says the government’s progress with reforms, such as reducing regulatory hurdles in logistics and energy, should help improve economic momentum, nudging growth up to around 1.6% in 2026 and close to 2% by 2027. Easier monetary conditions with inflation moderation will also help.
Standard Bank’s economists expect that:
- Growth momentum will build, with the Sarb forecasting 1.4% growth – a step up from this year’s estimated 1.2% thanks to more reliable electricity and enhanced logistics infrastructure, which are enabling businesses to scale production with greater confidence.
- A new inflation anchor was announced in the MTBPS, where the minister set a 3% inflation target, developed in close coordination with the Sarb and National Treasury. Softer food and energy costs should support this lower-inflation backdrop through 2026. Lower inflation also means a better real return on investment.
- The easing will continue with inflation tracking closer to its new target, while monetary policy is set to remain accommodative.
- Currency strength will persist. The rand’s resilience has been one of 2025’s notable developments, with the currency gaining 8% against the dollar since January. This appreciation has delivered tangible benefits by lowering the cost of imported goods and helping to anchor inflation at more favourable levels.
