South Africa’s business confidence declined sharply in the second quarter of 2025, with the RMB/BER Business Confidence Index (BCI) dropping five points to 40. This signals that only 40% of surveyed firms are satisfied with current conditions, stalling the tentative recovery seen since early 2024. The Bureau for Economic Research (BER) noted that while confidence remains above 2023 levels, it now falls slightly below the long-term average.

The survey, conducted from 7 to 26 May 2025, captured a period marked by political uncertainty and strained diplomatic relations between the US and South Africa. Despite positive developments such as the shelving of a proposed VAT increase and easing tensions within the Government of National Unity (GNU), global trade volatility and persistent local logistical constraints negatively impacted sentiment.

Chief RMB economist Isaah Mhlanga warned that momentum in the economy is slipping, following Q1 2025 GDP growth of just 0.1%. While wholesale trade saw a confidence uptick to 50—buoyed by lower interest rates, subdued inflation, and the rollout of the two-pot retirement system—other sectors declined, especially consumer-facing industries.

Forward-looking indicators also weakened in Q2, raising alarm over the sustainability of recovery. The BER stressed that while a repo rate cut will provide modest relief, faster structural economic reforms remain vital to address unemployment, poverty, and inequality.

Although the launch of Operation Vulindlela Phase 2 signals government commitment to reform, economists caution that execution remains a key challenge. Without meaningful implementation, South Africa’s economy remains highly vulnerable to both domestic stagnation and global economic shocks.