Finance Minister Enoch Godongwana, presenting the national budget to parliament, pointed to a combination of local challenges and external risks that have weighed heavily on the country’s economic outlook. High borrowing costs, persistent logistical inefficiencies, and slowing global growth, driven in part by ongoing geopolitical tensions, have all contributed to the downgrade.

“As a result, we now estimate real gross domestic product (GDP) to grow at 1.4% in 2025. This is lower than the 1.9% we projected in March,” said Godongwana during his budget speech. “Over the next two years, we project real GDP growth to rise moderately to 1.6% in 2026 and 1.8% in 2027. Looking further ahead, the risks to the outlook remain elevated. These include the worsening global outlook, weaker-than-expected growth in the fourth quarter of 2024, the persistence of logistics constraints and higher borrowing costs.”

Despite the subdued outlook, the Treasury is banking on infrastructure investment to reignite economic momentum. Over the next three years, the government is set to commit roughly 1 trillion Rand (around $55.6 billion) towards large-scale infrastructure projects aimed at driving growth and creating jobs.

The announcement comes at a time when SA is navigating a difficult fiscal landscape, marked by stagnant growth, high unemployment, and mounting public debt. Policymakers are under pressure to restore confidence in the economy while managing growing social and political demands.

--ChannelAfrica--