Standard Bank Lowers South Africa’s 2025 Growth Outlook to Below 1%

South Africa’s biggest lender has delivered a sobering update for the economy, but a surprisingly upbeat one for its shareholders.

Standard Bank’s latest interim results came with a headline figure that will worry policymakers and households alike: the bank now expects South Africa’s economy to grow just 0.9% in 2025. That’s a sharp drop from its March forecast of 1.7%. The reasons? A mix of global trade tensions, new US tariffs, and a dose of domestic political uncertainty that’s dampened investor confidence.

Why the forecast changed

Earlier this year, the United States slapped a 30% tariff on certain imports, rattling global markets. While the initial panic eased, the policy’s impact on trade flows especially for emerging markets, remains a real concern. Analysts expect it could shave 0.2 to 0.3 percentage points off South Africa’s GDP next year, pushing growth closer to 0.7% if the worst-case scenario plays out.

Standard Bank isn’t alone in its gloomier outlook. Investec and Efficient Wealth have also cut their forecasts below 1%, while Nedbank is holding on to an even 1%. The International Monetary Fund is slightly more upbeat, sticking with 1% growth in its latest projections.

A brighter spot: inflation and interest rates

While growth prospects have dimmed, there’s good news for borrowers. Inflation trended lower in the first half of the year, staying comfortably under the Reserve Bank’s 3%–6% target range. That allowed for interest rate cuts, 50 basis points by June, and another 25 in July, bringing the repo rate to 7.25%.

Standard Bank expects rates to hold steady for the rest of 2025, with a possible small cut early in 2026. Inflation, it says, should stay in the lower half of the target range well into next year.

Strong earnings despite the slowdown

If the economic picture is cloudy, Standard Bank’s balance sheet is anything but. Headline earnings for the first half of 2025 rose 8% to R24 billion, driven by steady loan book growth, rising fee and trading income, and disciplined cost control.

South African operations contributed R11.6 billion in earnings, with the rest coming from the bank’s Africa regions (R9.7 billion) and offshore businesses (R1.6 billion). Key performers outside South Africa included Angola, Ghana, Kenya, Nigeria, and Zambia.

The board rewarded shareholders with a 10% higher interim dividend, lifting the payout ratio to 56%. Return on equity climbed to 19.1%, keeping it in the group’s target range of 17%–20%.

Public and market reaction

On financial news forums and social media, reactions to the GDP downgrade were a mix of resignation and relief. Some users pointed out that sub-1% growth has become “the new normal” in South Africa’s economic cycle, while others welcomed the rate cuts as a rare win for consumers.

For investors, the strong earnings and generous dividend offered comfort that, at least for now, the country’s largest bank is weathering the storm better than the broader economy.

The bigger picture

Standard Bank insists that despite short-term headwinds, Africa still offers long-term growth potential. The bank’s strategy remains focused on expanding across the continent, banking on rising consumer markets and infrastructure needs.

For South Africa, though, the message is clear: without policy certainty, improved investment conditions, and more competitive global positioning, breaking out of the sub-1% growth trap will remain a challenge.

{Source: BusinessTech}

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