South Africa’s future: Three economic scenarios explored

Before the outbreak of war in the Middle East, South Africa’s growth prospects had perked up, thanks mainly to the fact that structural economic reforms had finally begun to take hold. But with global oil and financial markets in turmoil, our revival is in danger of being cut short.

Although domestic confidence is climbing, it has yet to build into the fixed investment upswing needed to sustain faster growth. This leaves the country in a vulnerable position.

We cannot stop the war, but we can (and must) tackle the country’s internal challenges with renewed urgency to build our resilience and reinvigorate the economy.

South Africa faces a set of crucial choices. The political and policy decisions we make now will determine whether growth collapses back to 0.5% a year or soars to 3% over the medium term; whether poverty eases or deepens; whether the fiscal position stabilises or deteriorates; and whether the balance of power tilts towards the reformers or the populists.

To understand both the costs of inaction and the benefits that could flow from timely action, the Bureau for Economic Research (BER) at Stellenbosch University has modelled three scenarios using a similar core econometric model as the National Treasury and the SA Reserve Bank.

This follows a structured process of engagement with more than 60 senior business leaders, government officials and academics over several months.

The BER’s scenarios are crafted around a bird theme, with acknowledgement to the iconic Mont Fleur Scenarios (1992) and the Indlulamithi South Africa Scenarios (2024), both of which also used bird metaphors to describe possible futures for the country.

They are the Hadeda (in which the status quo prevails); the Marabou Stork (in which South Africa slides towards becoming a failed state) and the African Fish Eagle (in which growth rises to 3% or more over the next few years).

Hadeda scenario: SA continues to muddle through

The Hadeda is just like the South African economy – noisy, low-flying and limited. In this baseline scenario, South Africa avoids renewed deterioration, but the deeper constraints that have mired it in a low-growth trap remain unaddressed and the economy continues to muddle through.

While the government of national unity (GNU) holds together, coalition complexity and weak state capacity limit its ability to translate reform intent into delivery. There is incremental progress, but implementation is slow; criminal-justice reform advances only gradually; and the broader state machinery continues to struggle, constraining growth.

The upshot is that the upward cyclical momentum SA is currently enjoying fails to translate into permanent, structural change, capping the growth rate below 2%. This is not enough to materially shift SA’s unemployment trajectory or deliver fiscal sustainability.

Marabou scenario: A rupture that results in another lost decade

The marabou stork, also known as the undertaker bird, depicts an economy where reform failure leads to institutional decay, where the capital stock is steadily eroded and the foundations for recovery are eaten away by crime and corruption.

The central trigger is a political realignment that results in a GNU that becomes more populist and fails to back the existing reform agenda. Criminal-justice reform stalls, confidence in the rule of law deteriorates and the investment-led recovery that could have followed improved enforcement is snuffed out.

These institutional failures rapidly translate into tighter financial conditions as investor sentiment sours and risk premia rise, reinforcing the country’s low-growth trap. Fiscal pressures intensify as weak growth and rising debt-service costs prevent consolidation, causing debt to climb to unsustainable levels.

SA is not simply growing slowly – it is losing the productive base required to grow at all, leading to a repeat of the lost decade of 2009 to 2019. Growth drifts down toward 0.5% over the medium term and remains depressed below that over the longer term. Poverty and unemployment rise, per capita income declines and the country’s politics become even more fractured.

African Fish Eagle scenario: Sustained economic growth of 3% or higher

This high-road scenario can be distilled into a catchy mantra: 3x3x3 in three. It sets out what SA could look like if it could achieve 3% growth, a 3% budget deficit and 3% inflation within three years. At a minimum, it would mean the creation of 2.4 million more jobs by 2030 than the economy produced in 2025. This is about one million more jobs in total than under the Hadeda scenario.

Importantly, it’s a story of implementation, not new plans. SA successfully uses the current political window to fix the basics and rapidly deliver on its reform agenda, supported by a step-change in execution driven by Operation Vulindlela and the normalisation of public-private partnerships.

This is complemented by a sustained confidence dividend arising from a visible enforcement of the rule of law. These gains feed directly into better financial conditions. In short, the country becomes an attractive investment destination once again, resulting in a sustained fixed-investment upswing.

The upshot is that rising growth and employment, falling poverty and political stability reinforce one another in a virtuous cycle.

Crucially, the Fish Eagle rises not because conditions are perfect, but because a cyclical recovery is converted into a permanent lift through sustained investment, institutional reform and capital deepening.

In the end, the difference between the Hadeda, the Marabou and the Fish Eagle is SA’s ability to deliver on its own reforms. The binding constraints have nothing to do with global geopolitics – they are all domestic: whether the country can build its capital stock, restore the rule of law, maintain credible institutions and connect to the world economy through a cost-effective national logistics system that boosts exports.

Though the danger is that the country could slide backwards into Marabou territory, what we should really be afraid of is that we remain just like the squawking, panicky Hadeda. This is the most likely scenario of all – where South Africa grows just fast enough to allow the elite to idle in complacency while socioeconomic pressures continue to build and bubble just under the surface.

It is a scenario of missed opportunity, stability without progress and rising long-term risk. South Africa cannot afford to remain a Hadeda. DM

Claire Bisseker is an economics writer and researcher at the Bureau for Economic Research.