The Mastercard Economics Institute’s 2025 Economic Outlook for South Africa predicts a 1.7% GDP growth and a 1.9% increase in consumer spending. Inflation is expected to moderate to 4.2%, easing pressures on households. Key sectors anchoring growth include tourism and women’s workforce participation, while ongoing migrant influences and policy adjustments are vital for economic stability and progress.
The Mastercard Economics Institute recently published the ‘Economic Outlook 2025’, highlighting pivotal changes anticipated in South Africa’s economic context. South Africa’s GDP is expected to grow by 1.7% year-on-year, slightly below the global average growth of 3.2%. This uptick, from 1.1% in 2024, is largely attributed to improvements in electricity supply and measures aimed at stabilizing economic activity.
Consumer spending in South Africa is projected to increase by 1.9%, while inflation is anticipated to ease to 4.2%, offering respite to households and businesses. Nonetheless, the economy faces challenges such as investment shortfalls and labor market pressures, with necessary policy adjustments expected to facilitate a gradual recovery. Following political reforms, the tourism sector shows promising potential for growth, although it has not yet regained its pre-pandemic stature.
Khatija Haque, Chief Economist for EEMEA at Mastercard, notes, “South Africa’s economic outlook for 2025 underscores opportunities for recovery through easing inflation, steady growth in consumer spending, and improvements in energy and tourism. By fostering financial inclusion, workforce participation, and innovation, the economy can set a course toward sustainable progress.”
Gabriel Swanepoel, Country Manager for Southern Africa at Mastercard, added, “Mastercard South Africa is pioneering local payment solutions, enhancing security and accessibility for individuals and businesses alike. “
The report identifies several key areas of focus, including:
1. Pricing Priorities: The Mastercard Economics Institute has observed a significant easing of inflation across major economies, projecting a global trim of 3.2%. This trend is mirrored in South Africa with inflation forecasted to decrease to 4.2%, down from 4.7% in 2024, providing welcome relief amid high price levels influencing consumer behavior.
2. Engines of Growth – Tourism: Despite challenges, South Africa’s tourism sector is highlighted as a crucial growth avenue, leveraging the country’s natural and cultural assets. Political stability and enhanced electricity supply since the formation of a national unity government have improved confidence in this sector.
3. Migration and Money: Migration trends over the past few years have significantly impacted South Africa’s demographics, contributing to one-third of population growth since 2019. This influx enriches human capital and intensifies remittance flows from expatriates back to families,
4. The Rise of the SHEconomy: Women’s participation in South Africa’s workforce has incrementally increased, with a 0.17% growth between 2019 and 2023. This trend, influenced by remote work opportunities, is fostering economic resilience and household income growth, aligning with global patterns in female employment.
The ‘Economic Outlook 2025’ report utilized extensive public and proprietary data, including Mastercard’s sales activity insights, to inform its predictions and conclusions.
In conclusion, the Mastercard Economics Institute’s ‘Economic Outlook 2025’ presents a cautiously optimistic view of South Africa’s economic future. With GDP growth projected at 1.7%, an increase in consumer spending, and a decrease in inflation, the foundation for recovery appears solid. Concurrently, developments in tourism, migration dynamics, and heightened women’s labor force participation will play pivotal roles in shaping the country’s economic recovery. Policymakers and businesses must focus on these factors to promote sustainable economic advancement in the year ahead.
Original Source: www.mastercard.com
