The North-West University (NWU) Business School Policy Uncertainty Index (PUI) for 4Q 2024 quotes a recent Business Day article on 2024 as “a momentous year of shakeups and more uncertainty".

SA’s future economic performance will hinge mainly on domestic policy decisions says the NWU's PUI

The Index says that negative trends like elevated policy uncertainty are indeed reversible if – in collaboration with the private sector where necessary – the right steps are taken with the domestic policy instruments under SA’s control.

If setting and implementing a GNU agenda must be one of the strategic themes of 2025, then staying on the right economic track is another crucial one.

2025 offers SA both great opportunities and risks.

To further build credibility and strengthen investor confidence in 2025, the stamp of authentic leadership must run like a golden thread through future GNU Cabinet decisions.

While external influences will still require to be skillfully navigated, there country's future economic performance will hinge mainly on domestic policy decisions that maintain a macro- environment that is ultimately efficient, stable, and consistent for investment and job-rich growth.

Further into negative territory

The NWU Business School PUI for 4Q 2024 unexpectedly went much further into negative territory to 65.7, compared to 53.5 in 3Q 2024 (baseline 50).

On balance, negative factors outweighed positive ones over the last three months.

Although further in negative territory, the PUI nonetheless identified the relevant data confirming SA’s slow but uneven economic recovery.

Business and consumer confidence boosted

Business and consumer confidence have been boosted in recent months by factors such as much lower inflation, the easing of interest rates, heavy withdrawal of pension funds under the ‘two-pot’ system, the cessation of Eskom load-shedding and the formation of the GNU.

The Sarb says that currently, household spending (i.e. consumption) is doing most of the ‘heavy lifting’ in SA’s improved growth prospects.

Poor figures disappointing

Despite these positive factors and other high-frequency data, the poor 3Q 2024 GDP growth figures were unexpected and disappointing.
Even when the bad agricultural numbers were stripped out, the rest of the economy was showing minimal growth.

Forecasts for growth in 2024 and 2025 have had to be trimmed.

Fixed capital formation has emerged as a major lagging indicator in SA’s economic performance.

Factors shaping business confidence are not identical to those driving the level of investor confidence.

Research confirms that policy uncertainty in the aftermath of elections encourages private actors to delay (in particular) investments that entail high costs of reversal.

Both external and internal uncertainties are therefore pertinent to the elevation of the 4Q 2024 PUI.

Global concerns

Globally, the IMF and other surveys project world economic growth at about a steady 3.3% performance next year, similar to 2024.

For now, the world economy therefore remains broadly supportive of the domestic economy.

However, geopolitical conflicts and trade tensions, such as may emerge from a US Trump administration, have the potential to generate persistent uncertainty and disrupt world trade and finance.

Global concerns and uncertainties have now arisen about the wider impact of intended foreign and tariff policies by US President-elect Trump.

There could subsequently be collateral damage to several other trading arrangements, such as AGOA, in which SA has an important stake.

A recent Stanlib survey confirms that SA corporates have been extremely cautious so far when investing in their local operations.

Hosting the G20 in 2025 is a great opportunity to ‘showcase’ the SA economy.

2025 promises a good year

Compared with twelve months ago, 2025 promises to be a relatively good year for the economy in which the economic and political tailwinds outweigh any headwinds.

The challenge in 2025 is to build on better short-term business confidence and convert it into long-term investor confidence.

In a nutshell, short-run optimism must be transformed into long-run commitments to underpin sustained job-rich growth.

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