By Vuyani Ndaba
JOHANNESBURG (Reuters) – South African economic growth will be a bit weaker this year than thought a month ago partly due to trade tensions, with U.S. President Donald Trump having paused a 31% tariff for 90 days imposed on imports from Africa’s most industrialized nation.
Economists polled by Reuters April 16-24 trimmed their forecasts by a median 0.2 percentage point to 1.5% for this year. Forecasts were in a 1.0%-2.1% range compared with 1.3%-2.3% in a March poll. But the forecast for 2026 was unchanged at 1.8%.
The latest 2025 consensus from the survey of 25 economists was much more optimistic than the International Monetary Fund’s latest view of 1.0%, cut from 1.5% in January.
Nicky Weimar, chief economist at Nedbank, lowered her GDP forecast for 2025 to 1.1%, 0.3 percentage point lower than her previous view.
She said that was based on expectations for higher global tariff barriers, although she expects them to be ultimately less extreme than what the White House proposed on April 2.
“Another reason for our downward revision is that the production side of the economy fared poorly in Q1. So, even before the tariff chaos hit, local producers and exporters were struggling,” said Weimar.
South Africa currently benefits from the African Growth and Opportunity Act, U.S. legislation that gives preferential tariff-free access to its markets to some countries. But renewal of the legislation, which expires later this year, is unlikely, according to analysts.
In better news for South Africans struggling with the cost of living, inflation fell for the first time in five months in March to its lowest since June 2020, due to a drop in fuel costs and softer price rises for tuition.
Price pressures got a further reprieve on Thursday after the government scrapped plans to raise value-added tax following a political backlash that threatened the stability of its ruling coalition.
The proposal to raise VAT by 1 percentage point over two years, intended to boost state revenue, met resistance as Africa’s biggest economy grapples with sluggish growth and public discontent over rising living costs.
Inflation is now expected to average 3.7% this year, lower than the 4.0% forecast in the previous poll. The 4.5% consensus for 2026 inflation, however, was unchanged.
That near-term reprieve has reignited debate around more interest rate cuts from the South African Reserve Bank, which targets inflation between 3%-6%.
Rates were held steady last month.
South Africa’s repo rate, currently 7.50%, is expected to hold steady in May, the survey found, with policymakers waiting until either July or September for the next cut to 7.25%.
The SARB will then hold the repo rate steady for the remainder of the year, with another cut to 7.00% in early 2026, according to median forecasts.
(Other stories from the April Reuters global economic poll)
(Reporting by Vuyani Ndaba, Editing by Louise Heavens)
