Ramaphosa’s GNU lullaby

10 November 2025 – Does the GNU have what it takes? Which economic sectors are boosting sentiment in SA? Why is manufacturing struggling? Will loadshedding return? Are US tariffs done for?

Ramaphosa’s GNU lullaby

After a long radio silence from President Cyril Ramaphosa, he finally – and at short notice – called a “strategic retreat” with the leaders of the Government of National Unity (GNU) parties. The summit took place on 1 and 2 November, 177 days after their previous meeting on 8 May.

By lavishing wine and attention on his political partners at the summit, Mr Ramaphosa worked to ensure their docility ahead of the G20 summit at the end of November, which he wishes to use to burnish his stature, while also hoping for smooth sailing in his further pursuit of the ANC’s political programme. Reporting from the event indicates that it worked, with most attention focused on operational matters and contentious issues carefully excluded.

The risk arising for South Africa’s future trajectory is that consensus seeking and conflict avoidance create a sense of complacency among the GNU partners and in the political sphere more broadly. Some economic gains in the months ahead will bolster that risk of complacency, even if they are modest. We report further on some such positive developments below.

The danger of complacency is that it prevents South Africa from shifting the trajectory it is on currently. Ordinary people are yet to see the benefits of the GNU in real economic growth and fixed investment.

Growth remains below 1%, unemployment is stuck above 30%, and fixed investment is languishing below 15% of GDP.

These are the headline numbers that the country needs to shift. To achieve that, it must find a way to deal with the factors holding back investment, such as race-based laws, threats to property rights, public sector inefficiency, and high rates of crime, corruption and impunity.

However, these are matters the ANC would rather not touch, as its dogged pursuit of harsher race targets in the private sector, of the Expropriation Act, the National Health Insurance, and ongoing weaknesses in law enforcement document.

According to Presidency spokesperson Vincent Magwenya, the GNU parties adopted a Medium-Term Development Plan at their strategic retreat, which will serve as the administration’s foundational programme. He said: “The leaders were unanimous that the GNU is united and strong. The meeting agreed that this forum of party leaders would meet regularly to provide strategic political direction to the work of the GNU.”

This signals that the GNU will keep itself occupied with busywork while carefully staying away from the fundamental reforms the country needs.

Signs of life in the economy

As explained in the preceding section, South Africa’s future potentially positive trajectory risks being undermined by complacency among the GNU partners and in the broader political sphere.

While it is yet to break through the 1% ceiling, the South African economy is showing signs of life. According to the National Association of Automobile Manufacturers of South Africa’s (NAAMSA) October sales update, new vehicle sales (including trucks and other commercial vehicles) came in at 55 956. This marked the best monthly performance since October 2015, as well as marking the 13^th straight month of month-on-month growth.

Meanwhile the country’s second largest property group, Redefine, reported positive rent reversions (when new rental rates are higher than previous rates when leases come up for renewal) in the retail sector for a second year. This signals improved sentiment in the sector.

On infrastructure, according to Statistics SA 2024 public sector capital expenditure (capex) reached R267 billion, a R42 billion increase from 2023. The improvement in 2024 marked the third annual increase and pushes public sector capex closer to the 2016 peak of R283 billion. Fixed investment in South Africa has consistently lagged emerging market peers.

Finally, last week Bank of America noted, “S&P could upgrade SA [sovereign credit rating] to BB in November 2025 on higher GDP growth and declining debt to GDP … 2025 looks set to be a stable year for the GNU”.

Manufacturing slump continues

The country’s manufacturing sector continues to struggle. In October South Africa’s manufacturing sector sentiment fell back into contractionary territory. The seasonally adjusted Absa Purchasing Managers’ Index (PMI) declined from 50.8 points in September to 49.2 points in October, marking the sharpest drop in factory activity since March 2025. This reflects recurrent persistent disruptions in momentum across the manufacturing sector, including from ongoing energy insecurity, transport inefficiency, and high fuel and electricity prices.

The PMI is a composite indicator of operating conditions within the private sector. It is based on five sub-indices: new orders, output, employment, suppliers’ delivery times, and stocks of purchases. A reading below the neutral 50-mark signals a contraction.

Absa noted that business confidence remained low “as the sector continues to navigate external trade constraints, supply-side uncertainty, and cost volatility.”

The current contraction is mainly owing to weak domestic demand and policy constraints, such as high interest rates and persistent inflation. South Africa’s macro policy environment has also not been conducive to manufacturing activity. Weak activity in the construction, mining and related sectors has further reduced industrial demand for manufactured inputs.

As highlighted in the CRA’s June 2025 Macro Review, SA’s deindustrialisation dilemma, the country is missing out on a major moment of significant global trade shifts and will continue to do so if domestic policies and legislative barriers continue inhibiting manufacturing, trade, and the broader economy. Despite the presence of the global headwinds, realigning domestic policies and gaining more investment would allow the manufacturing industry to improve – and lift the PMI.

SA not out of the energy-shortage woods

Eskom continues to pose a systemic risk to the South African economy. While loadshedding has abated for the time being, and while households and businesses have invested in solar where possible, Eskom’s de facto monopoly in generation and distribution remains. Should the state-owned entity’s Energy Availability Factor (EAF) drop, persistent blackouts will again occur.

According to EE Business Intelligence managing director Chris Yelland, Eskom’s Medium-Term System Adequacy Outlook 2026-2030 Report identifies “a looming base-supply cliff: 8.4GW [gigawatt] of Eskom coal capacity is scheduled for retirement in 2029 to 2030, and the 1.15GW Cahora Bassa import from Mozambique expires simultaneously, creating a 9.5GW potential loss of firm supply”. 9.5GW is equivalent to 10 stages of loadshedding.

Eskom has done well to refurbish some of its coal station fleet; over the last 18 months this work elevated the EAF. The entity’s unbundling into separate units proceeds at a snail’s pace, and ideological constraints mean the government is yet to allow meaningful private sector competition to form. Come the end of this decade, South Africa could yet face the return of consistent power cuts.

SCOTUS hears tariff arguments

Last week the United States (US) Supreme Court (SCOTUS) heard arguments on whether President Donald Trump acted lawfully when he used the 1977 International Emergency Economic Powers Act (IEEPA) to impose broad tariffs on nearly all trading partners.

Two questions were presented. Firstly, does IEEPA allow a president to use national emergency declarations to impose tariffs? Secondly, if it does, is that an unconstitutional transfer of Congress’s power to the executive? The case will determine the standing of Executive Order 14257, signed on 2 April 2025 (“Liberation Day”), which declared a national emergency based on US trade deficits and drug flows across the country’s borders. That declaration formed the legal basis for reciprocal tariffs worldwide, and specific fentanyl-related tariffs on Canada, Mexico, and China.

A ruling against the administration would unwind a major component of its trade policy. Roughly 60% of the tariffs introduced in this term are tied directly to the IEEPA; if a sweeping decision is made against the administration it could amount to $140-billion in tariff refunds. An adverse decision for the administration will also influence how trading partners adapt in their ongoing trade and non-trade negotiations with Washington.

An adverse ruling for the administration would create near-term volatility as tariffs are revoked, re-issued, or re-structured. A split ruling could entrench a narrower but permanent emergency-driven tariff tool. And if the Court upholds the administration’s position, broad tariff power becomes a standard feature. Thus, regardless of the ruling, the tariffs are unlikely to return to pre-2025 levels. South African companies that export to the US should not bank on a SCOTUS decision to change the administration’s preferred trade policy course.

The court has placed the case on a fast track, which means a ruling can be expected by the end of the year.