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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Employment Statistics in South Africa

Q1 2025

The employment statistics for the first quarter of 2025 present a mixed picture across different sectors, as detailed in the table above. Some sectors experienced increased employment compared to the fourth quarter of 2024, while others saw a decline in job opportunities during this period. Overall, the unemployment rate edged higher from 31.9% in the previous quarter to 32.9% in Q1 2025. Meanwhile, the expanded unemployment rate decreased slightly from 41.1% to 40.3% during the same timeframe.

A Positive Turning Point for Global Trade and Markets

Analysing the Impacts of the US-China Deal and Its Broader Economic Implications

The recent negotiated agreement between the United States and China marks a significant milestone in international trade relations, providing a much-needed breather for the global economy. By agreeing to reduce tariffs for a 90-day period—U.S. tariffs cut from 145% to 30%, and Chinese tariffs from 125% to 10%—both nations have demonstrated a renewed commitment to cooperation.

Manufacturing Production

March 2025

In March 2025, manufacturing production in South Africa declined by 0.8%, following a 3.2% contraction in February. This decrease contrasted with the upward movement in the Purchasing Managers’ Index (PMI), which rose from 44.7 in February to 48.7 in March.

Navigating International and Domestic Winds

South Africa’s Economic Prospects

In a world of interconnected economies, global developments unfailingly ripple through national borders. For South Africa, recent international and domestic events offer a complex tapestry of challenges and opportunities that could shape its economic trajectory.