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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

Mining Production and Sales

February 2025
In February 2025, mining activities in South Africa saw a significant decline of 9.6%, following a revised decrease of 1.5% in January 2025.

Trump-China Trade War

and the Implications for South Africa
The ongoing trade war between the United States and China represents one of the most significant geopolitical developments in recent years, impacting bilateral trade, economic growth, and international partnerships. As both nations impose steep tariffs—145% on Chinese goods entering the U.S. and 125% on American products entering China—the situation continues to evolve, with notable implications for global trade networks, including South Africa.

Manufacturing Production

February 2025
In February 2025, manufacturing production in South Africa declined by 3.2%, mirroring a similar contraction of 3.2% in January. This decrease was anticipated, as the Purchasing Managers’ Index (PMI) dropped from 45.3 in January to 44.7 in February.

The Impact of Local and Global Recession on the South African Economy in 2025

As the world enters a potentially recessionary phase due to factors such as the recent tariff impositions by the Trump administration, South Africa faces an intricate web of challenges that threaten to exacerbate its already precarious economic situation. With fiscal debt soaring to approximately 75-76% of GDP and a budget deficit projected at 5%, the implications of a recession on employment, trade, and government finances are profound.

Gold and Foreign Exchange Reserves

March 2025
The African International Liquidity Position, indicated by Net Gold and Foreign Exchange Reserves, experienced growth in both U.S. dollar and Rand terms as of March 2025.
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