Business
World Bank Boosts South Africa’s GDP Forecast as Credit Rating Upgrade Looms

South Africa’s economic prospects are looking up as the World Bank has revised its GDP growth forecast for 2025, while Bank of America predicts a potential credit rating upgrade for the country.
In its latest report, the World Bank increased South Africa’s GDP growth projection from 1.3% to 1.8% for 2025, with expectations of further acceleration to 2% by 2027. This positive outlook is largely driven by improvements in the energy and logistics sectors, which have been key areas of concern for the country’s economic stability.
What’s Driving the Growth?
According to the World Bank, the modest recovery will be fueled by:
- Enhanced Infrastructure Services: Ongoing improvements in the energy sector and logistics are set to boost productivity.
- Favourable External Conditions: A stable global environment is expected to support trade and investment.
- Controlled Inflation: This will allow for a more flexible monetary policy, encouraging bank lending to businesses and households, thereby stimulating economic activity.
However, the bank cautioned that despite this growth, South Africa will continue to face challenges in reducing poverty and unemployment, which remain stubbornly high.
Potential Credit Rating Upgrade on the Horizon
Adding to the optimism, Bank of America has forecast that South Africa could improve its credit rating by up to two notches by 2025.
Tatonga Rusike, Sub-Saharan Africa economist at Bank of America, noted that stronger GDP growth and effective debt management could lead to significant credit rating improvements.
“If South Africa delivers stronger GDP prints, S&P can review again in November 2025 and into 2026 for potential rating upgrades,” Rusike said.
“Growth of at least 1.5% of GDP annually over the medium term is good enough to support these upgrades,” he added.
Where Does South Africa Stand Now?
Currently, South Africa is rated below investment grade (commonly referred to as “junk status”) by all three major credit rating agencies:
- S&P Global: Rated BB- with a positive outlook (as of September 2024).
- Fitch Ratings: Matches S&P’s BB- rating with a similar outlook.
- Moody’s: Rated at Ba2 with a stable outlook (last updated in April 2022).
South Africa is three notches below investment grade, but if the country achieves the predicted two-notch improvement, it will be on the verge of reclaiming investment-grade status—a critical milestone for attracting foreign investment and reducing borrowing costs.
What Needs to Happen for the Upgrade?
- Sustained GDP Growth: Maintaining growth rates of at least 1.5% annually over the next three years.
- Debt Reduction: Effective strategies to lower the national debt burden.
- Policy Stability: Continued reforms in key sectors, including energy, infrastructure, and public finance.
The Road Ahead for South Africa’s Economy
While these forecasts offer hope, the path to economic recovery is still fraught with challenges. Persistent inequality, high unemployment, and policy uncertainties could derail progress if not effectively managed.
However, with the right policies in place, South Africa could be poised for a stronger economic future, supported by:
- Improved investor confidence
- Lower borrowing costs
- Job creation through infrastructure projects
The next few years will be critical in determining whether South Africa can capitalize on this momentum and achieve the credit rating upgrades that could reshape its economic landscape.
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