What do agriculture experts predict for South Africa's GDP growth in 2025?

IOL News

2 days ago

There have been mixed reactions from the Agriculture sector and economists on expectations for Tuesday's announcement of the GDP growth for the first quarter of 2025.
There have been mixed reactions from the agriculture sector and economists on expectations for Tuesday's announcement of the GDP growth for the first quarter of 2025.
Wandile Sihlobo, the chief economist of the Agricultural Business Chamber of South Africa (Agbiz), said, 'One sector that some may be observing is the performance of agriculture, which last year was a significant drag on the economy. The mid-summer drought, delays in harvesting deliveries, and animal diseases were some of the challenges we encountered in 2024.'
This year, the conversation should shift somewhat and become more upbeat. 'We have an excellent summer grains and oilseeds season, with the latest production forecasts by the Crop Estimates Committee suggesting a harvest of 17.98 million tonnes, up by 16% from the 2023-24 drought season. Favourable rains and decent area plantings support this,' he said.
Sihlobo said South African sugar production for the 2024-25 production season is forecast to recover by 7% year-on-year to 2.09 million tonnes. 'This is also due to favourable weather conditions and the availability of sufficient water for irrigation. We have also received encouraging production data from SA Wine and Vinpro, forecasting South Africa's wine grape harvest at 1.244 million tonnes, an 11% recovery from the exceptionally poor harvest of 2024. We also see encouraging production data from citrus, various fruits, and vegetables. In poultry production, the moderating prices of maize and soybeans should help the industry in its ongoing recovery.'
Sihlobo said the one area that remains a concern is the livestock industry, primarily due to the recent outbreak of foot-and-mouth disease. 'We have already seen various trading partners temporarily banning South Africa's beef exports due to the foot-and-mouth disease outbreak. Given the sizable share contribution of the livestock industry to South Africa's agricultural gross value added, its challenges are something worth reflecting on when considering South African agricultural performance.'
Francois Rossouw, the CEO of Southern African Agri Initiative (Saai), said the sector is certainly in a recovery period after the excessive rain the country had. 'It was positive to see a healthy jump in our exports in the first quarter of the year, helped a bit by things running smoother at the ports. However, there are big external challenges ahead, especially when it comes to securing good access to important markets like the US and navigating hurdles in promising places like China. So, while there's some positive momentum, the outlook is definitely shaped by these significant trade issues that need sorting out.'
Investec economist, Lara Hodes, said that they expect a weak quarter one 2025 reading, following quarter four 2024's 0.6% quarter-on-quarter seasonally adjusted lift, with incoming data readings for the quarter unfavourable.
Specifically, industrial production (mining, manufacturing and electricity), which makes up a substantial 19.5% of GDP, declined by -2.9% qqsa in the first quarter, while the trade sector, which makes up around a further 12.5% of GDP, disappointed, she said.
Hodes said the outlook is reflective of a still subdued economy, which continues to face a number of challenges, notably on the logistics front. 'Business Confidence is likely to have remained in contractionary territory at around 47, from 45 logged in Q4.24 and Q3.24 respectively. While political uncertainty has eased to an extent and the GNU is expected to endure, domestic growth remains lacklustre while global uncertainty remains elevated, with the tariff situation fluid.'
Johann Els, Old Mutual Group Chief economist, said that given the performance of high-frequency data, he expects GDP growth to be negative. 'I project GDP to be - 0.1% in the first quarter of 2025. This compares to a +0.6% growth in the last quarter of 2024. The reason for the negative projection is the severe production performance in the mining and manufacturing sectors. Mining production, with a weight of 4.8% into the economy, was down more than 16% on an annual basis quarter-on-quarter, and similarly, manufacturing production at a bigger weight of 12.5% of the economy was down 9% on an annual basis quarter-on-quarter.'
TLU SA general manager, Bennie van Zyl, said that there are so many interchangeables in the Agriculture sector that it is difficult to compare one year to next year. 'This is due to us having late rain, but it could still result in a good harvest. There are also farmers that haven't harvested yield yet due to the late rains. We also have farmers who are not able to sell cattle due to foot-and-mouth disease, so we have to wait and see. I'm cautious to make a prediction on the sector GDP growth.'
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