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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
March 20, 2025

View on Demand in the Economy

Retail Sales Performance

January 2025

Retail sales in South Africa significantly surpassed market expectations in January 2025, rising by 7.0% year-on-year, well above the anticipated contraction of 1.8%. This unexpected growth suggests a resurgence in consumer demand, particularly notable as it follows a low base in 2024.

The South African Chamber of Commerce and Industry (SACCI) Business Confidence Index also remained stable in January, further bolstering confidence in demand. Additionally, a decrease in consumer inflation coupled with an interest rate cut by the South African Reserve Bank in January 2025 appears to have positively impacted consumer spending.

Key contributors to the growth in retail sales included:

  • General Dealers: Increased by 8.4%, contributing 3.6 percentage points to overall growth.
  • Textiles and Clothing: Grew by 10.1%, adding another 1.6 percentage points.

This encouraging retail performance in January 2025 signals positive momentum for the economy as South Africa approaches the end of the first quarter. The interest rate cuts implemented from September 2024 to January 2025 seem to have relieved financial pressure on households, with demand showing signs of recovery. Maintaining this momentum throughout December 2024 and into 2025 will be essential, as consumer demand remains a vital driver of economic growth in South Africa.

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More Coverage

Manufacturing Production

August 2025
In August, South Africa’s manufacturing output further declined by 1.5%, following a 1.3% decrease in July. This downturn was significantly below market expectations, which had forecasted a 0.3% increase for August. The Purchasing Managers’ Index (PMI) also fell by 1.4 points, from 50.8 in July to 49.5 in August 2025, indicating a less favourable business climate anticipated by manufacturers for the month.

Reviving South Africa’s Economy

A Balanced Path to Growth, Jobs, and Prosperity
South Africa faces significant economic challenges that threaten the nation’s stability and future prosperity. Over the past decade, sluggish growth, high unemployment—particularly among the youth—and infrastructure decay have become critical issues. These problems are compounded by inconsistent policies, energy shortages, and a prevailing uncertainty in the investment climate. The African National Congress (ANC) has recognised this urgency, unveiling a ten-point plan aimed at revitalising the economy. While this approach shows a concerted effort to address systemic issues, a complementary set of reforms proposed in the Alternative Economic Blueprint offers a promising pathway toward sustainable growth, job creation, and economic freedom.

Gold and Foreign Exchange

September 2025
The South African International Liquidity Position, measured by Net Gold and Foreign Exchange Reserves, showed growth in both USD and Rand terms for September 2025.

Private Sector Credit Extension (PSCE)

August 2025
In August 2025, credit demand grew by 5.9%, slightly below the anticipated market prediction of 6.0% for the month. Since the initiation of interest rate cuts in September 2024, there has been a noticeable acceleration in overall credit growth, with most subcategories showing increases, particularly in July.

Internation Trade and Trade Balance

August 2025
International trade measures South Africa’s demand for foreign goods and services relative to its demand for domestically produced products in the global market.
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