Monthly macro and economic insights report

Our monthly To the Point column by economist Dr Roelof Botha offers in-depth analysis and commentary on the latest economic trends, market developments, and financial news. Designed to keep you informed and ahead of the curve, each edition delves into key economic indicators, explores their impact on global and local markets, and provides insights to help you navigate the ever-changing economic landscape.

GDP growth remains positive

During June, Statistics South Africa published the country’s GDP data for the first quarter of 2025. The results were fairly predictable, due to the earlier release of first quarter data of individual key indicators of economic activity, most notably mining output, retail trade sales, manufacturing output and wholesale trade sales.

Fortunately, the year-on-year real GDP growth rate remained positive (but only just), coming in at 0.8% – the fifth consecutive quarter of annualised growth below 1%.

It remains a point of concern to policymakers and business owners alike that the country’s growth trajectory took a turn for the worse in 2022. At this time, record-high interest rates started to bite into the pockets of households, and employment creation started to slow down, due to the high cost of capital formation and credit. Before the switch to restrictive monetary policy, the economy had witnessed a remarkably robust recovery from the Covid-19 pandemic, growing at an average annual real rate of 2.4% between the third quarter of 2021 and the third quarter of 2022.

Since then, GDP growth has only averaged 0.7% per quarter, which is insufficient to lower the country’s high unemployment rate. Hopefully, the exceptionally low level of inflation will soon lead to further interest rate cuts, which will undoubtedly stimulate demand in the economy.

Oil & gas prices under pressure

Energy commodity markets remain under pressure amidst rising supply, especially for oil, which is good news for South Africa. Although renewed global trade uncertainty and military conflict in the Middle East caused a temporary spike in oil prices at the end of June, the ceasefire between Israel and Iran has contributed to a resumption of a downward trend.

The OPEC+ alliance is expected to raise its combined oil output by 411,000 barrels per day in August, bringing the total output increase during 2025 to 1.78 million barrels per day (which is approximately 1.5% of global demand).

The move by the OPEC+ alliance is widely regarded as a form of punishment for overproducing members, whilst the group’s leader, Saudi Arabia, apparently aims to reclaim market share lost to US shale-oil drillers and other rivals.

Natural gas futures in the US have been hit even harder by a combination of higher supply and lower demand. The latter was due to milder weather, which curbed both heating and cooling needs, enabling an increase in storage injections, whilst LNG export demand also weakened. At a level of $3.40/MMBtu on 1 July, the LNG price is almost 30% lower than four months ago.

Welcome surge in platinum price

Platinum has started to dominate news on the precious metals front, with a price surge of 34% between 30 May and 26 June. Although it has retraced marginally since then, the price of $1,343/oz on 1 July was 40% higher than the prolonged rangebound average of $960 recorded between 2015 and 2024.

Although platinum supply is characterised by inelasticity, a large supply deficit (since 2023) has now produced a hefty positive price response. The industrial demand for platinum has managed to increase consistently over the past decade, but investment demand has been erratic. Jewellery demand has declined consistently until recently.

The World Platinum Investment Council forecasts a further supply shortfall of almost 1 million ounces this year, mainly due to a 4% drop in global output. Combined with platinum’s relatively more attractive affordability versus gold and platinum’s critical importance in the global energy transition (especially in the hydrogen economy), the prospects for further price gains are favourable. This promises to be exceptionally good news for the South African platinum mining industry.

Precious metals boost trade surplus

South Africa’s exports enjoyed a splendid month in May, increasing by 6.3% from the April figure to record a value of R176 billion. Subdued growth of only one per cent for the value of imports in May resulted in the second-highest trade surplus for the year to date, namely R21.6 billion.

Only three of the top 10 export sections by value recorded negative year-on-year growth, with three sections in double-digit positive growth territory. The top performers were precious metals, base metals, machinery and agriculture & food.

An outstanding feature of the trade data for May was the 30% year-on-year increase in the value of precious metals exports, which is the country’s second-largest earner of foreign exchange (via trade). In the process, this export section has narrowed the gap with mineral exports, which remains in position number one. A year ago, exports of precious metals represented 64% of the value of minerals exports, but this ratio has now increased to 84%.

Vulindlela phase two kicks off

Details of the priority sectors targeted for the second phase of the presidential reform programme, also known as “Operation Vulindlela (OV)”, have been announced. Priority sectors include logistics, water, the visa system, land-use & affordable housing, local government, and digital transformation. Fortunately, the parties in the Government of National Unity agree that OV is one of the key mechanisms to restore a higher economic growth trajectory and ensure employment creation.

During the first phase of OV, which is managed by highly-qualified technocrats and led by Rudi Dicks, R500-billion was unlocked in the economy, mainly in energy, after the Cabinet lifted the cap on independent energy production. This has paved the way for a surge in private sector solar photovoltaic installations, with significant further investments in clean energy on the cards.

OV helps government departments and the three spheres of the state work together on often simple reforms. It is apparent that local government dysfunction is harming the economy, and the metros will be targeted to ensure an overhaul of service delivery standards. It is encouraging that one of the key reforms aims to standardise and professionalise the appointment of senior officials in local government, which is in line with the recommendations of the World Bank.