November 2, 14:40IOL

Review of South African economic indicators may accelerate Moody's credit rating upgrade

Revised economic data for South Africa could facilitate a quicker upgrade of the country's credit rating, as Investec chief economist Annabel Bishop expects Moody's to raise the rating in the near future.

This revision has led to a decrease in the projected debt-to-GDP ratio—a key metric used by credit rating agencies to assess a country's ability to repay its debt.

Thanks to a re-basing and benchmarking exercise conducted by Statistics South Africa, the measured size of the economy in 2022 increased from 6.67 trillion to 6.99 trillion, representing an increase of about 5%. GDP levels were revised upwards for each year from 2018 to 2023 by an average of 4.2%.

Part of this increase in economic size reflects previously unregistered activities, including illegal mining and online gambling. Furthermore, Statistics South Africa's revised estimates more fully account for activities such as taxi services and electricity generated by farms and households. These changes mean that official figures provide a more complete picture of ongoing economic activity rather than indicating a sudden surge in production.

According to Bishop, the revision raised the value of the South African economy in 2025 by 5.3%.

Not a Sudden Improvement

However, this revision does not mean that households are better off or that the cost of living has decreased. Johann El, senior economist at PSG, notes that the increase in economic size 'does not suddenly make South Africa richer or solve the growth problem.'

According to Statistics South Africa, the largest growth occurred in the mining industry, where the measured value increased by 12.5%, mainly due to the inclusion and improved coverage of illegal mining. Finance, real estate, and business services grew by 9.1% thanks to improved owner-occupied housing valuations.

El argues that the revision improves the ratios used to assess the country's public finances but does not eliminate fundamental economic problems. His revised estimates show that the total debt ratio for the current year is 74.5% compared to the previous estimate of 78.2%. The consolidated budget surplus is estimated at 3.7%, lower than the previous 3.9%.

The revised historical data also shows that economic growth in 2025 was lower than the initial estimate, at 0.9% instead of 1.1%, according to El. Consequently, the larger measured size of the economy does not indicate accelerated economic growth.

Cheaper Loans?

However, the larger measured size of the economy improves the debt-to-economy ratio because government debt is calculated against a broader economic base. This makes the debt burden more manageable in the eyes of credit rating agencies, even if the revision does not mean the government needs less money.

Bishop states that the revised figures reduce South Africa's debt-to-GDP ratio by an average of four percentage points over the medium-term budget period. It is expected that by the 2028/29 fiscal year, this ratio will reach approximately 73% compared to the previous forecast of 77.5%.

It is also expected, according to Bishop, that the budget deficit will fall to 3% of the economy faster than previously forecast. These changes reflect the effect of measuring the economy at a higher level, not an equivalent reduction in the volume of public debt or spending.

Credit rating agencies assess the government's ability to service its debt. Bishop believes that the reduction in the debt ratio should accelerate South Africa's return to investment grade, with an expected Moody's rating upgrade in the near future.

South Africa remains in 'junk' rating status. A return to investment grade would expand the pool of investors willing to hold its government debt and could lower borrowing costs for the state.

Inflationary Barrier

The potential benefit for consumers will depend on whether lower government borrowing costs are passed on to the broader economy. The revised data itself does not change the interest rates that households pay on mortgages, car loans, or other borrowings.

For consumers, inflation and interest rates remain more immediate factors affecting personal finances. Bishop reported that annual consumer price inflation rose to 4.5% in September from 4.4% in August, following a 1.34 per liter rise in gasoline prices and increases in housing and utility costs. Core inflation, excluding food and fuel, stood at 4%.

Bishop forecasts that inflation will approach 5% by the end of 2026, with rising fuel prices contributing to this increase. She does not expect an interest rate hike at the South African Reserve Bank meeting in November, as a reduction in the general fuel excise duty in November and December is expected to provide some relief.

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iol.co.zaNovember 1, 17:00

Western Cape Economy Shows Fastest Growth in South Africa, But Gauteng Remains the Largest Economy

The economy of the Western Cape demonstrated a higher growth rate than any other province last year; however, Gauteng remains significantly larger in size.

According to the latest provincial GDP data from Statistics South Africa, the economic growth of the Western Cape was 1.4% in 2025, surpassing Gauteng's figures (1.1%) and the national average (0.9%).

Nevertheless, when considering the overall size of the economy, the gap remains substantial. Last year, Gauteng accounted for 32.5% of South Africa's nominal GDP, more than double the share of the Western Cape, which stood at 14.2%.

Stats SA notes that its estimates for the period 2023 to 2025 are preliminary and may be adjusted.

Despite a slower growth rate, Gauteng remained the largest economic entity among South African provinces in 2025. It contributed 32.5% to the national nominal GDP, outpacing KwaZulu-Natal (15.5%) and the Western Cape (14.2%).

The Western Cape's share decreased from 14.3% in 2024, while Gauteng's share slightly reduced from 32.6%. Thus, although the Western Cape topped the growth rankings, Gauteng's economy remains substantially larger.

Limpopo recorded the third-largest growth rate at 1%.

In 2025, finance, real estate, and business services were the largest contributors to the Western Cape's economy, accounting for 28% of the provincial output. Manufacturing contributed 14%, trade 13%, and personal services 10%.

The province also had a significant impact on several national industries. It provided 23% of South Africa's agricultural added value and 23% of construction added value. Its contribution to national finance, real estate, and business services was 18%, and to transport and communications was 18%, and to manufacturing was 17%.

These figures reflect the structure of the provincial economy, not the sectors responsible for its growth last year.

Cape Town contributes significantly to the Western Cape's economy, although the latest GDP report does not provide separate growth information for this metropolis. The provincial economic overview and forecast for the Western Cape in 2025 estimates that Cape Town accounted for 72.3% of the provincial GDP in 2024. In that year, the metropolis's economy grew by 0.4%, with financial services contributing the most to the growth.

Construction, trade, and transport negatively impacted the metropolis's growth in 2024. The report does not specify what portion of the province's 1.4% growth in 2025 is attributable to Cape Town.

The city also publishes quarterly economic activity indicators for Cape Town, tracking local economic trends across various sectors. Significant activity in property development was observed in the central city. The Central Business District improvement report on the state of the city for 2025 set the value of its property development project portfolio at over R12.8 billion across 29 projects for 2025/26. This amount was 41% higher than the R9 billion registered in 2024.

The portfolio included eight completed projects valued at over R1.9 billion, 14 projects under construction valued at over R5.4 billion, and five projects in the planning stage valued at R5.4 billion. The value of two proposed projects has not yet been confirmed. These figures cover the Central City Improvement District (CCID) area of 1.74 km² and include projects at various stages, but they do not represent completed investments across all of Cape Town.

Recent employment data shows a mixed picture for the province. Stats SA's quarterly labour review for the second quarter of 2026 recorded a decrease of 48,000 employed people in the Western Cape compared to the previous quarter. This was the largest quarterly employment decline among all provinces.

The number of employed people fell from approximately 2.88 million to 2.84 million, corresponding to a decrease of 1.7%. However, annual figures were more positive: employment increased by 91,000 people, or 3.3%, compared to the second quarter of 2025.

The Western Cape government reported that the official unemployment rate in the province was 19.5% in the second quarter, slightly lower than the 19.6% in the first quarter. These figures indicate that while the province's economy grew faster than anywhere else in the country last year, the employment situation remains more complex.

Overall, the South African economy grew by 0.9% in 2025, with all nine provinces showing growth. The Western Cape led the provincial rankings, while Gauteng maintained its status as the country's largest economic contributor.

iol.co.zaOctober 29, 13:14

R 371 billion difference in South Africa's GDP highlights growth limitations by headline figures

South Africa's economy could reach a nominal volume of R 8 trillion in 2025 if the annual growth rates recorded after 2022 were applied to the country's rebased gross domestic product (GDP). This calculation demonstrates a discrepancy between the revised size of the economy and its subsequent dynamics.

As part of a benchmarking and rebasing exercise conducted by Statistics South Africa, the measured size of the economy in 2022 was increased to R 6.99 trillion, representing a 4.9% increase. Applying the annual nominal GDP growth rates recorded in subsequent years to this adjusted starting point yields a modeled GDP of R 8.01 trillion by 2025. This amount exceeds the published nominal GDP figure of R 7.64 trillion by approximately R 371 billion.

It is important to note that this calculation is counterfactual, not an official GDP estimate. It illustrates what the nominal size of the economy could have been if historical growth rates were applied to the revised 2022 base, but it does not prove a loss of R 371 billion in economic output.

Higher Growth

According to the Stats SA report, 'National Accounts: Sources and Methods,' the benchmarking exercise increased GDP levels for each year from 2018 to 2023. The average increase over this period was 4.2%, ranging from 3.5% in 2018 to 4.9% in 2022. These adjustments reflect changes in the methods and data used to measure economic activity, not a sudden surge in production.

The largest adjustment was recorded in the mining sector, where the measured contribution increased by 12.5%, mainly due to the inclusion and improved coverage of illegal mining. The second largest increase was in finance, real estate, and business services, which amounted to 9.1%, linked to an improved method of valuing owner-occupied housing. This is significant because GDP is an assessment of economic activity, not a direct count of every transaction in the country; improvements in information and methodology can change the measured size and composition of the economy without altering actual production.

Nominal Growth Calculation

The historical nominal GDP figures used in the calculation are taken from the IMF's International Financial Statistics series, published via the U.S. Federal Reserve System's FRED database. This series records nominal GDP at R 7.04 trillion in 2023, R 7.35 trillion in 2024, and R 7.64 trillion in 2025. These figures imply annual nominal growth rates of approximately 5.6%, 4.5%, and 3.9%, respectively. Applying these rates sequentially to the revised 2022 base leads to the following modeled scenario: the difference between the modeled 2025 figure and the published one is approximately R 371 billion.

However, the comparison requires careful interpretation. The historical growth rates are derived from the published nominal series, whereas the calculation itself starts with the revised 2022 level. Therefore, the result serves as an illustration of how a higher base point alters the subsequent trajectory while maintaining these growth rates. It does not replace the official revised GDP series.

Nominal Growth Is Not Real Growth

The difference between nominal and real GDP is key when analyzing these indicators. Nominal GDP measures the value of economic output at current prices, accounting for both changes in production and changes in prices. Real GDP is adjusted for price changes to provide a clearer picture of whether the volume of goods and services produced has increased.

According to Stats SA, South Africa's real GDP grew by 0.5% in 2024 and 1.1% in 2025. These growth rates indicate that the economy expanded in real terms, albeit at moderate rates. Nominal figures are higher because they also reflect price changes, and they cannot be interchanged with real GDP growth rates; the R 371 billion difference cannot be described as lost real output.

Questions

The rebasing exercise provides a more complete picture of the economy's scale, including activities that were previously unaccounted for or measured with less complete information. The counterfactual calculation, in turn, shows how applying subsequent nominal growth rates to the revised starting point yields a significantly different headline figure for 2025. Ultimately, it is a matter of measurement and economic trajectory: how the revised understanding of the economy's size compares to the path implied by the nominal growth rates recorded since 2022.

Methodology Note:

The R 371 billion difference is a modeled counterfactual, not an official GDP estimate or a measure of lost economic volume. It applies the annual nominal GDP growth rates published for 2023–2025 to Stats SA's revised nominal GDP baseline of R 6.99 trillion for 2022. The historical growth rates are sourced from the IMF's International Financial Statistics series, published via the U.S. Federal Reserve System's FRED database. The calculation assumes the applicability of these rates to the revised base and aims to illustrate the effect of a higher starting point.