- South Africa’s GDP per capita in 2025 remained below its 2007 level, making it the only BRICS economy to have lost ground over nearly two decades
- The country underperformed its emerging market peers and needs to change to restore sustainable growth
- South Africa’s outlook has improved, supported by greater energy stability, renewed investor confidence, and catalytic backing for power infrastructure investment
- However, the recovery remained fragile in a volatile global environment and geopolitical tensions.
After nearly two decades of weak growth, declining investment and rising structural constraints, South Africa faced a narrow window in which decisive reforms could determine whether it escaped long‑term stagnation or remained trapped in low growth.
To unpack these dynamics, trade credit risk management company, Coface South Africa hosted a live webinar on 23 April 2026 in Johannesburg titled: “How can South Africa break free from the persistent trap of economic stagnation in a world defined by uncertainty, structural constraints, and rising geopolitical tensions?”
The session featured Abdul Vally, CEO Coface South Africa and Aroni Chaudhuri, Chief Africa Economist, whose recent research, Cracks in the BRIC(K)S: why South Africa fails to thrive examined why South Africa had underperformed its emerging‑market peers: Brazil, Colombia, Chile and Malaysia and what needed to change to restore sustainable growth.
Understanding the roots of stagnation
Coface’s research showed that South Africa’s Gross Domestic Product (GDP) per capita in 2025 remained below its 2007 level, making it the only BRICS economy to have lost ground over nearly two decades. Once buoyed by commodity demand and global integration in the early 2000s, growth had been derailed by successive shocks including the global financial crisis, the end of the commodity super‑cycle, and the COVID‑19 pandemic which exposed deep structural weaknesses.
Key constraints highlighted included:
- The failure of the electricity system, driven by ageing infrastructure and chronic under‑investment
- A deeply distorted labour market marked by persistent unemployment and skills mismatches
- Weak capital formation, with investment levels well below peer economies
- Deteriorating public finances, driven largely by wage‑heavy spending rather than infrastructure investment.
What had changed and why it mattered
Despite these challenges, the outlook was not without hope. During the webinar, Chaudhuri examined developments that had begun to shift sentiment, including:
- Improved stability in South Africa’s electricity supply, with Eskom recording its strongest grid performance in five years and extended periods without loadshedding
- South Africa’s removal from the FATF grey list and recent sovereign credit rating upgrades, which had helped lower borrowing costs and rebuild investor confidence
- The World Bank’s US$350 million credit‑guarantee vehicle, which was expected to unlock up to US$10 billion in private infrastructure investment over the next decade, particularly to expand the transmission grid.
“These were important signals,” Chaudhuri noted, Chief Africa Economist at Coface. “But perception and credibility mattered just as much as policy execution. Markets responded not only to reform, but to how believable and sustained those reforms appeared.”
Global risks and geopolitical pressures
The discussion also placed South Africa’s recovery within a highly volatile global context. Rising geopolitical tensions, particularly the ongoing conflict in the Middle East, had placed renewed pressure on energy markets, oil prices, shipping routes and global inflation expectations.
For an open economy like South Africa’s, these dynamics were shown to directly affect currency stability, inflation and interest‑rate expectations, trade flows and external demand as well as business confidence and investment decisions.
Against this backdrop, traditional forecasting had become increasingly difficult, reinforcing the need for scenario‑based planning and robust risk frameworks.
Looking ahead
The webinar concluded with a forward‑looking discussion on what would ultimately determine whether South Africa could transition from a fragile recovery to sustained, inclusive growth. Key themes included:
- The urgency of structural reforms over the next 12–24 months
- The role of fiscal discipline, infrastructure investment and policy coherence
- How businesses could navigate heightened uncertainty while positioning for opportunity
- Which structural strengths, including a diversified industrial base, strong financial institutions and deep global trade integration, continued to support recovery.
“South Africa’s transition from a fragile recovery to sustained, inclusive growth will ultimately depend on the ability of businesses to keep investing and trading through uncertainty. By helping companies protect cash flow and manage counterparty risk, trade credit insurance gives firms the confidence to pursue opportunity rather than retreat from volatility and that confidence will be critical in turning the country’s structural strengths into lasting economic momentum,” said Abdul Vally, CEO of Coface South Africa.
Watch the full recording here.
The full study is available here.
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