South Africa's Economy Poised for Modest Turnaround After Years of Stagnation

Goolam Ballim has a precise phrase for what South Africa needs: “escape velocity.” The Standard Bank Group chief economist used it recently to describe a growth trajectory that finally breaks free from a decade of near-stagnation, and the phrase carries weight because the numbers behind it are so modest. He projects growth of 1.7% next year, rising to 2% by 2028. After ten years averaging below 1%, that counts as momentum.

The economy’s long underperformance was not accidental. Mismanagement and corruption hollowed out public institutions and infrastructure, draining confidence from businesses and investors alike. What has begun to change, Ballim argues, is the physical reality of doing business in South Africa. Rolling blackouts that crippled companies for years have eased as electricity supply improves. Port and railway efficiency gains have cut logistics costs. Nearly 70% of the reforms President Cyril Ramaphosa outlined in 2020 are either completed or on track. These are not abstract policy wins. They translate into lower operating expenses and faster movement of goods for ordinary businesses across the country.

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The International Monetary Fund is less bullish, holding its 2027 growth forecast at 1.3%. That gap in expectations reflects genuine uncertainty about whether the reforms will hold.

The Madlanga Commission sits at the center of that uncertainty. Established by Ramaphosa last year, the judicial inquiry is investigating criminal syndicates embedded in South Africa’s justice system, a probe triggered by explosive allegations from the police commissioner in KwaZulu-Natal province. The commission reflects the persistence of corruption that took root under former President Jacob Zuma. Its final report was originally due at the end of August. On Thursday, the president extended the deadline to November 16, pushing potentially damaging findings past the municipal elections on November 4.

Ballim sees the commission’s work as potentially “cathartic,” capable of strengthening investor confidence if South Africa demonstrates genuine resolve in confronting what it uncovers. The decisive variable, he told an interviewer in Cape Town, is institutional capacity. “Capital is going to chase confidence,” he said. “Confidence is going to hinge on the capacity for the rule of law to be substantial, predictable, and to hold.”

By contrast, the cost of failure extends well beyond South Africa’s own borders. For every percentage point increase in South African GDP, the broader southern African region could see its own gross domestic product rise by as much as 0.7%, Ballim noted. “If South Africa does well, the region does well,” he said. “If there is one region that can really turn its dial, and turn the dial for the rest of sub-Saharan Africa, it is southern Africa, with South Africa at its core.”

The recovery, then, is real but unfinished. Infrastructure improvements and governance reforms have begun to reverse years of decline, yet the economy remains exposed to any slippage in institutional reform or political will. Whether the Madlanga Commission’s delayed findings, once published, accelerate that confidence or complicate it may prove to be the defining test of the moment Ballim describes.