The newly revamped PayInc Economic Index increased in August, signaling an uptick in economic activity. This index replaces the BETIBankservAfrica Economic Transactions Index and is now the primary tool for assessing economic activity.
Despite the increase seen in August, the economy still faces numerous challenges, including higher US import tariffs, inefficient rail and port infrastructure, strain on trading partner countries, and cheaper imports impacting local businesses.
South Africa’s economy in August 2025 presents a complex picture of surprising resilience in the face of significant domestic and global challenges.
The new index notes mixed business sentiment and sectoral performance during the period.
The PayInc Economic Index and vehicle sales show positive trends, and inflation remains controlled, but business confidence is low, and the manufacturing sector is constrained.
Independent economist at PayInc Elize Kruger says the PayInc index increased by 1.3% on a monthly basis.
At the same time, some sectors are faring better and have contributed to the resilience evident in economic activity.
One such sector is retail; retail trade sales increased by 3.8% year-on-year in the first half of 2025.
Inflation has also remained well under control, with headline inflation forecast to average around 3.4% in 2025 vs 4.4% in 2024.
So far, the Reserve Bank has cut interest rates cumulatively by 75 basis points, alleviating pressure on households and corporates.
“That is indeed some of the positive factors that are also at play in the economy, but unfortunately, if you look at the sectoral breakdown, we have just a few sectors that are performing well at the moment and a whole bunch that are still under pressure. So that combination results in the economy really being stuck in the muddling along mode, just tracking along at about 1 percent, and unfortunately, that is also the type of growth rate that results in our unemployment also just moving mostly sideways.”
Kruger says the outlook for the remainder of 2025 is uncertain, particularly with recent job losses potentially impacting economic activity.
