Next Africa Can South Africa Sustain its Economic Rebound?
Dec 4, 2025
Yvonne Mhango, an economist from Bloomberg Economics specializing in Africa, dives into the recent surge in South Africa's financial assets. She explores how soaring commodity prices, government reforms, and global easing have restored investor confidence. Mhango discusses the importance of fiscal consolidation and outlines key milestones for investors to watch by 2026, including budget credibility and local elections. She provides insightful commentary on the gradual recovery expected, with growth projections aiming for 1.8% in coming years.
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Stocks Rally Fuels Sector Rotation
- South African equities rose ~50% in dollar terms driven by a weaker dollar, higher commodity prices and reforms.
- Investors rotated from resource stocks into banks and telecoms as earnings and yields improved.
Global Tailwinds And Governance Gains
- External factors like US rate cuts and rising commodity prices improved South Africa's terms of trade.
- Domestic wins, including removal from the FATF list and faster fiscal consolidation, boosted governance credibility.
Coalition Government Spurs Reform Competition
- The government of national unity injected optimism and competitive reform momentum among ministers.
- That led to fiscal restraint, scrapped VAT hikes, and targeted steps like modernizing immigration and tourism flows.