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

May 8, 2025

Gold and Foreign Exchange Reserves

April 2025

The African International Liquidity Position, reflected by Net Gold and Foreign Exchange Reserves, grew in both USD and Rand terms as of April 2025. Despite a nearly 60c Rand depreciation against the dollar, reserves increased, boosted by a 4.7% rise in gold prices, which remain 41.4% higher than in 2024.

Foreign reserves also surged from December 2024, despite Rand volatility following President Trump’s re-election, diplomatic tensions, and US-China tariff disputes. Key commodities like gold, oil, platinum, and coal offer vital insights into South Africa’s mining sector and inflation outlook.

Monitoring these trends is crucial, as inflation expectations will influence the South African Reserve Bank’s (SARB) interest rate decisions later in 2025. A stable Rand and lower oil prices support favourable inflation forecasts, but global geopolitical tensions and potential changes to trade agreements like AGOA could cause rapid shifts.

With recent US tariffs and an unchanged Fed rate in May 2025, the Rand is expected to face continued volatility, impacting international markets and South Africa’s economic outlook.

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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.