Last week’s GDP figures for the third quarter confirmed that the country is seeing green shoots emerging in the economy, business organisation Business Leadership South Africa CEO Busi Mavuso highlights in her latest newsletter.

“The 2.1% year-on-year growth surprised economists and has triggered many to revise upward their forecasts for the full year from the previous consensus of around 1.2%. We should now beat that by a reasonable margin. Of course, this is still far below the meaningful growth we need to turn around unemployment, but it is a clear step in the right direction,” she explains.

The figures showed a quarterly improvement in investment, which Mavuso asserts is key to meaningfully expanding the economy.

“Within that was a modest improvement in public sector spending on investment, which has been particularly weak. That enabled the first overall increase in investment since mid-2023. To be clear, investment levels at 13.7% of GDP are still far too low, but it was positive to see the modest recovery,” she points out.

Mavuso says the GDP outcome adds another positive sentiment driver, following improvements in fiscal performance reported in the Medium Term Budget Policy Statement, and the credit rating upgrade by S&P.

“This is beginning to feed into business sentiment and, last week, we saw business confidence climb five points in the Rand Merchant Bank/Bureau for Economic Research survey for the fourth quarter, turning around two consecutive declines. The improvement in confidence was broad-based across sectors, which is particularly encouraging,” she enthuses.

Manufacturing confidence rose considerably after three consecutive quarters of decline, reaching its highest level since 2022, which Mavuso highlights as notable owing to it being employment-intensive.

Retail confidence also increased considerably, with sales volumes holding up well, suggesting consumer spending has momentum heading into 2026, Mavuso indicates.

“The agricultural sector is also feeling more positive, with the Agbiz/Industrial Development Corporation Agribusiness Confidence Index for the quarter having risen five points. What we need to see now is production catching up with sentiment,” Mavuso stresses.

Despite this momentum, credit ratings agency Moody’s last week announced it was keeping its rating unchanged, maintaining its cautious stance on South Africa’s growth trajectory.

Moody’s acknowledged the improved fiscal performance but pointed to persistent structural challenges: State-owned enterprises remain financially weak, growth projections are modest, infrastructure continues to age and the labour market stays under pressure, Mavuso outlines.

The agency says it will upgrade if the country achieves sustained improvements in economic growth driven by electricity and logistics reforms, alongside higher investment levels. Conversely, any setbacks in structural reforms could trigger a downgrade.

“The changes Moody’s says will cause it to upgrade are exactly what organised business is striving to achieve in partnership with government.

“It is critical that we follow through on concluding reforms of the electricity sector, particularly the unbundling of the independent grid operator and the implementation of a truly competitive electricity market where traders can buy from multiple generators and sell to multiple customers, creating genuine price competition that drives down costs,” Mavuso emphasises.

She also calls for efforts in the logistics sector, especially the concessioning of rail and port facilities to private operators who can invest and provide competition.

“So, while Moody’s caution is understandable, the evidence of increasing momentum is growing. The green shoots we’re seeing in GDP, investment, and business confidence can take root – but only if we ensure that translates into actual growth-enhancing changes,” Mavuso highlights.

She calls for utility Eskom to follow through on unbundling and embrace competition and on Transnet to conclude its current concessioning processes swiftly and then embark on new ones.