Bureau for Economic Research: SA must seize positive momentum before it fizzles out

The Bureau for Economic Research (BER) said that South Africa needs to seize the positive momentum before it fizzles out as the country looks to reforms under Operation Vulindlela to spur economic growth.

The Stellenbosch-based agency said South Africa is on track to achieve around 1.3% growth for 2025 as a whole, better than what economists feared a few months ago.

But the bureau said effective structural reforms could be a much-needed push towards the 2% mark.

Following some positive developments in 2025, the BER said the country hasn’t solved its problems, but the balance of risks has tilted and mood is less negative.

“What sits behind the improvement? Partly, some long-awaited policy signals have become actual decisions. For instance, the National Treasury and Reserve Bank uniting to formally lower the inflation target to 3% is material. It will lower the cost of capital over time, improve competitiveness, and anchor expectations. The Bank’s 25bp rate cut in November was a cautious nod to that new regime. SA’s exit from the Financial Action Task Force’s grey list and the S&P ratings upgrade are also votes of confidence in the reform process.

“None of this fixes SA overnight, but collectively, it nudges the country onto a more credible macro footing. Two, local sentiment is also improving. The RMB/BER Business Confidence Index ticked up meaningfully to 44 in the fourth quarter. After a choppy year, this turn in direction counts. But there was still plenty of grit in the survey comments: crime, corruption and red tape remain stubborn drags, and many firms are not yet convinced the good times will stick.”

The bureau said simply fixing what is broken won’t achieve more rapid, transformative long-term growth.

What’s needed is a laser-like focus on a set of urgent priorities to turn the R1.8 trillion sitting on corporate balance sheets into the wave of investment needed to get growth pumping.

The BER believes the next steps should include appointing highly credible new heads to the National Prosecuting Authority (NPA), South African Revenue Service (SARS) and the police service, establishing an anti-corruption agency as a Chapter 9 institution with the necessary skills, funding and training and mplementing the recommendations of the Zondo Commission and the Madlanga Commission when concluded.

The agency said that the Government of National Unity (GNU) needs to double down on structural reforms, address the water and electricity challenges at the metros and focus on exports, with mining at the forefront.

The bureau said South Africa doesn’t need new plans or new committees but, instead, needs urgency, leadership and discipline to implement a handful of catalytic actions and cement those already taken.