Market Update: Ramaphosa talks up economy’s recovery, but economists warn gains are fragile – Full Analysis

Economists have offered mixed reactions to President Cyril Ramaphosa’s upbeat assessment of South Africa’s economic recovery, warning that while several indicators have improved, growth remains too weak to deliver meaningful job creation and sustained investment.

On Monday, Ramaphosa said that in the last months of 2025, South Africa saw a number of indicators that collective efforts to rebuild the economy are bearing fruit.

“The economy has posted four consecutive quarters of growth. There has been a steady reduction in unemployment, while recent data released by Statistics South Africa shows that levels of poverty and inequality have declined considerably. Confidence in our economy is rising, the stock exchange has been performing well, and the average inflation rate is the lowest it has been in two decades,” he said.

Ramaphosa added that late last year, South Africa exited the Financial Action Task Force grey list, which is an important signal of institutional improvement and a boost to investor confidence.

“We have also seen a sovereign credit ratings upgrade, reflecting strengthened fiscal credibility. While these signs of progress are encouraging, there is no time to rest. The difference between a temporary lift in growth and a sustained shift in our economic trajectory lies in expanding investment. Now we must steer our ship towards greater prosperity for all South Africans,” he said.

Ramaphosa said at its first meeting of the year, the Presidential Economic Advisory Council (PEAC) made clear proposals on how to achieve this goal. “A body of respected local and international economists, academics, and practitioners, the council provides strategic and evidence-based advice on policy decisions that promote economic stability, growth, and inclusivity.”

Professor Waldo Krugell, an economist at North-West University, said while the President presents a rather rosy interpretation of a recovery gathering pace, he is getting excited about decimals. “He is not wrong that a number of things seem to be moving in the right direction. The key challenge is to translate positive vibes into actual business confidence and private sector investment. The PEAC’s proposals are familiar and generally good ideas, but businesses need to be convinced of real implementation and measurable progress.”

Professor Raymond Parsons, from the North West University Business School, said Ramaphosa’s message rightly recognises that South Africa must now urgently capitalise on the rosier economic outlook that 2026 presents.

“Recent positive developments now need to be translated into durable growth, higher investment, and more jobs. This resonates with what many economic commentators and businesses have recently also been saying. The President’s letter confirms that the recovery still needs careful nurturing, as the economy is not on cruise control; it still requires skilful steersmanship and direction to stay on track,” he said.

Parsons added that although not mentioned, South Africa must also shake off its reputation for crime and violence. “The golden thread that must run through all growth-oriented policies and projects this year must be to ensure effective implementation by mobilising the necessary capacity to do so. In particular, the state-of-the-nation-address (SONA) and the Budget next month therefore must reinforce, expand, and concretise the overall thrust of the President’s letter.”

Unisa economist Dr Eliphas Ndou said that these are marginal growth rates.

“The economy needs effective policy coordination to sustain long-term economic growth. In the current environment of global trade policy uncertainty, effective coordination between domestic monetary and fiscal policies will have a huge multiplier effect on private investment and household consumption,” he said.

Ndou added that these policies are not reinforcing the multiplier effects to sustain economic growth.

Futhermore, Cosatu parliamentary coordinator Matthew Parks said there are critical green shoots that government and workers have been able to secure from the ending of loadshedding to improvements at our ports to the reopening of passage rail lines and the turnaround of SA Revenue Service. “These have seen South Africa growth rates improve and our exiting grey listing and investment rating upgrades. These will help lay the foundations for higher economic growth and hopefully a fall in unemployment.”

Parks added that whilst welcoming these important achievements, South Africa cannot be complacent when growth remains low and unemployment high at 42.4%.

“More must be done to fix the state, stimulate growth, create jobs, and provide relief to the unemployed and the poor. We need to reach 3% plus economic growth if we are to turn the tide on unemployment,” he said.

Efficient Group Chief Economist Dawie Roodt said the market does make for positive news, but more is needed. “This points to improvement in conditions, but investment is needed into factories and mines in South Africa. South Africa’s GDP could reach 1.5% or just below, which means much more growth is needed to improve economic conditions in South Africa.”

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