South Africa’s economic outlook is under renewed scrutiny following the implementation of elevated United States tariffs on key exports and the expiration of the African Growth and Opportunity Act (AGOA). These developments, coupled with domestic policy constraints and global uncertainty, are projected to weigh on short-term growth and employment figures, according to recent assessments by the South African Reserve Bank (SARB) and the International Monetary Fund (IMF).
The SARB’s latest Monetary Policy Review forecasts that gross domestic product (GDP) growth will remain modest through 2025 and 2026, with estimates ranging between 1.2% and 1.4%. This is in part attributed to the impact of import tariffs introduced by the US administration, as well as muted fixed investment in the second half of 2025.
Since April 2025, South African exports to the US have faced a 10% general tariff. This was intensified in August when a 30% “reciprocal” tariff was reintroduced, replacing the previous pause. South Africa’s automotive industry—one of its largest industrial sectors—has been significantly affected. According to SARB data, automotive exports to the US totalled R35 billion in 2024. The new 25% tariff on these goods is notably higher than those applied to some other exporting countries, raising concerns about reduced market competitiveness.
While some economic forecasts had suggested resilience in the face of these measures—with certain analysts projecting up to 1.6% growth in 2025—SARB and IMF projections remain more cautious. The IMF revised its 2026 forecast for South Africa’s GDP to 1.2%, citing the potential lag in the transmission of tariff impacts on trade and employment. The Reserve Bank has projected slightly higher at 1.4%, though it acknowledged downside risks linked to external conditions and domestic structural challenges.
The expiry of AGOA at the end of September 2025 has further contributed to uncertainty. Though there have been discussions within the US administration regarding a possible extension of the Act, no formal decision has been made amid a government shutdown in Washington. Moreover, future eligibility criteria remain unclear, and South Africa’s continued participation has not been guaranteed.
Bilateral trade discussions between South African and US officials are ongoing. South Africa’s Minister of International Relations and Cooperation, Ronald Lamola, has described the talks as constructive. Nonetheless, policy divergence remains an area of discussion, particularly on issues such as Broad-Based Black Economic Empowerment and land reform. These policies remain a consistent part of the domestic legislative landscape and are supported by the current Government of National Unity.
Labour market data from Statistics South Africa reflects persistent structural challenges. In the second quarter of 2025, the official unemployment rate rose to 33.2%, with 140,000 additional individuals recorded as unemployed. Formal sector job losses over the same period amounted to approximately 230,000, as reported in the Quarterly Employment Survey. Broader labour underutilisation remains high, with over 12 million South Africans actively seeking employment.
The SARB has advised that structural economic reforms may be necessary to enhance productivity and competitiveness. These could include diversification of export markets, strengthening of existing trade partnerships, and improved infrastructure investment. Such reforms are viewed as important for reducing vulnerability to external shocks and promoting more sustainable growth.
More broadly, the developments reflect wider discussions across the continent on the balance between economic integration, policy autonomy, and trade diversification. While external relationships remain important, there is growing interest in expanding intra-African trade and developing policy frameworks that respond to national and regional contexts.
South Africa’s current economic position illustrates the complexity of navigating global trade systems amid shifting policy environments. As discussions on future trade frameworks and industrial policy continue, emphasis on inclusive growth, policy consistency, and regional cooperation may play an increasingly central role in shaping long-term outcomes.
