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.

Tourism recovery on track

During July, the number of overseas tourists arriving in South Africa increased by 20% (year-on-year) and by an even more impressive 29% from the June figure, taking the rate of recovery from the Covid-19 pandemic to within a whisker of 100%. This rate is calculated as the current tourist arrivals as percentage of arrivals in the same month prior to the dramatic decline in global tourism caused by the lockdowns and restrictions on air travel during 2020.

South Africa’s tourism industry is on the verge of a full recovery, with 1.3 million overseas travellers having visited the country between January and July – 83,000 more than in 2024. Ever since arriving at a recovery rate of 80% during the 2nd quarter of 2023, this rate has hovered at between 75% and close to 90% but has now been lifted to 95%. 

The revival of the tourism industry is exceptionally good news for the economy, as GDP growth has been lethargic as a result of record high interest rates between 2022 and 2024 and the ongoing challenges posed by inefficiencies in logistics infrastructure. The latter is being dealt with slowly but surely, especially with regard to the pending privatisation of some of Transnet’s rail routes and the expansion of Durban’s harbour.

Growth in trade surplus

Despite the upheaval in global trade relations caused by the selective tariffs imposed by the US, South Africa has enjoyed a splendid export performance during the first seven months of the year, realising a cumulative trade surplus of R100 billion for the year-to-date.

In the process, the country’s cumulative trade balance since 2012 has managed to turn around a deficit of R242 billion up to 2019 into a surplus that breached the R1 trillion level in July 2025. In terms of value, the top five export sections for the year-to-date remained minerals, precious metals, vehicles & components, agriculture & food and base metals.

An outstanding feature of the trade data for January to July was the narrowing of the export value gap between minerals and precious metals, with the latter starting to encroach on the number one position of mineral exports. Another key observation is the sustained growth of agriculture and food exports, a section that is fast encroaching on the number three position (held by vehicles and components). Bumper crop estimates for 2025 are likely to provide further impetus to agriculture exports.

Strong recovery of port activity

South Africa’s ports seem to be on a path of recovery from a myriad of problems that have been encountered over the past decade, especially the debilitating effects of state capture, corruption and mismanagement on Transnet’s operations, in general. The Covid-19 pandemic was also responsible for days when chaos reigned, as harbours were closing and re-opening on a regular basis around the world.

Ever since the beginning of last year, however, things have changed quite dramatically, with an increase in the number of containers handled at the five ports having increased by 64% between January 2024 and July 2025. The latest throughput of containers is approaching levels last seen almost a decade ago.

Despite the presence of challenges posed by adverse weather, vacant berths, as well as equipment breakdowns and shortages, Transnet Port Terminals is investing R4 billion in new equipment, including straddle carriers, forklifts, components for four ship-to-shore cranes, rubber-tyred gantries and haulers. Hopefully, the Government of National Unity’s commitment to closer cooperation with the private sector will lead to a continuation of improved efficiency and the expansion of port capacity.

Full recovery for motor trade sales

It took 17 quarters for the number of new local vehicle sales to recover fully from the Covid-19 pandemic, but the 2nd quarter of 2025 finally witnessed a higher level than pre-Covid, with 135,000 new vehicles having been sold. Based on the 4-quarter average, this translates into approximately 1,500 new vehicles on South Africa’s roads every day of the calendar year. This fact raises concerns over the lethargy regarding the maintenance of existing roads and the dire need for the construction of new roads.

The resumption of the rate-cutting cycle by the Monetary Policy Committee (MPC) of the South African Reserve Bank in May has undoubtedly played a major role in the upward trend of the Drive Motor Index (DMI), published by Drive.co.za. The DMI is a composite index that measures the real percentage change in key indicators of the motor vehicle industry, and it remains on an upward year-on-year trajectory. It has also moved to a higher level than prior to the Covid-19 pandemic.

Motor trade activity at large represents a sector valued at more than R1 trillion per annum. There has been a further rate cut in July, which means that the prime rate is now 10.5%, which is 125 basis points lower than at the end of August 2024. Prior to the start of a marginal relaxation of monetary policy, the prime rate had stayed at 11.75% for 16 consecutive months. Hopefully, further rate cuts will serve to propel the motor trade to new heights during the rest of the year.