Economic Update September 2025
- Dr Roelof Botha
- Sep 30
- 3 min read
The downside
Although Eskom managed to turn a modest profit for the first time in eight years, many questions remain over the electricity utility’s operational performance and its commitment to root out rampant corruption. The latter has come to the fore again with revelations of a scam with electricity coupons that has run into billions of rands. It is also unclear whether Eskom is fully committed to the important objective of supporting a transition to renewable energy. In an address to delegates at the annual Real Estate Industry Summit in Midrand on 2 October, the Chairman of Eskom made denigrating remarks about solar power, whilst singing the praises for coal-based power generation, which needs to be eventually phased out if planet Earth is to be saved for future generations.
The bizarre way in which President Donald Trump is attempting to encourage larger production volumes in the US by punitive and unwarranted tariffs is bound to inflict substantial economic pain on African exporters. In addition to African countries already facing increased trade barriers in the US market, the expiry of the US preferential trade framework - the Africa Growth and Opportunity Act (AGOA) - is set to provide a double whammy to the 32 countries that received preferences until September 30. African farmers have already had to battle against the effects of the European Union’s long-standing Common Agricultural Policy (CAP) for the past 63 years, which makes it difficult to export agricultural products and processed food into the world’s most lucrative consumer market. It has therefore become imperative for the African Union (AU) to expedite the Abuja Treaty of 1991, which aims, inter alia, to create an African Common Market (ACM) via the African Continental Free Trade Area. Unless these efforts gain traction, the continent’s prospects for further economic diversification and growth will remain under threat.
The upside
Recovery of home prices
During the third quarter of 2025, the average home purchase price for homebuyers registered with BetterBond managed to beat its previous record high by the smallest of margins, remaining just short of the R1.6 million mark. For first-time buyers, the average price has also recently reached a new record high, marginally higher than R1.3 million.
Despite these increases, the residential property market still favours buyers, with a year-on-year increase in the average house price for all buyers of only 1.2%. This is below the current inflation rate of 3%. Since the second quarter of 2023, when the residential property market entered a slump, the average house price for all buyers has nevertheless increased by 5.9% (in nominal terms), which is virtually on the nose of the change in the consumer price index over this period.
Surge in gold & platinum prices
The gold price continues to soar to new all-time highs, targeting the $4,000 mark. The rise in the gold price has been nothing short of spectacular, with a 133% increase from its level three years ago. The latest surge occurred in the wake of a US interest rate cut, which had been anticipated for several months.
Gold’s record high has resulted in a positive spin-off for platinum, with jewellery demand for this precious metal having been boosted in recent months. The resources sector on the JSE has also reaped rich rewards, with the resource-10 index more than doubling since the beginning of the year.
With the yield on 10-year US Treasury bonds declining by 70 basis points since mid-January and dovish expectations from the Federal Reserve, investor appetite has shifted toward safe havens, which could further boost gold and platinum. The timing of the surge in precious metal prices is most welcome, as South Africa’s trade balance is bound to take a knock in the wake of the new US tariff and a global scramble for alternative export markets to the US.
Rand strength continues in September
South Africa’s currency enjoyed a splendid run during the first month of spring, outperforming every currency of note against the US dollar, including the Euro, the Chinese yuan, and the British pound. The rand has strengthened by more than 9% against the greenback since the beginning of the year, and only four other currencies monitored by Exchange4Free have a better record during 2025, namely the Brazilian real, the Euro, the Mexican peso, and the Polish zloty.
The rand’s performance was especially impressive against the background of a stable US dollar index, which ended September on 97.8 – unchanged from a month earlier. The dollar remains under pressure due to lower bond yields and weakness in several key economic indicators, including the services sector's purchasing managers’ index (PMI) and signs of rising unemployment.
On Balance, by Dr Roelof Botha, deliberately emphasises positive news, which often highlights the resilience of the South African economy and the immense scope for new business opportunities.
Comments