When do we get a government of national unity (GNU) growth spurt? The underlying direction of travel and reform momentum looks set, but when does the growth actually arrive, given we need to create some employment? It’s easy to talk about longer term and higher — perhaps more capital-intensive — growth through the end of this administration, or even in a year’s time, but what about now?

While I am continually trekking around clients holding forth on the outlook, the past two weeks saw a particularly intense set of meetings with business big cheeses. The vibe remains the same as with foreign and local portfolio investors. A restocking of goodwill and generally warm vibes, but little real action yet to open the taps in a meaningful way.

Growth in the second quarter was “fine” at 0.4% on the quarter, but considering how weak the base of the first quarter was and the mixed bag on investments, this really wasn’t anything to crow about.

Looking forward there is going to be no fiscal stimulus to growth, with the National Treasury focused on a fiscal anchor to reduce debt and live within its means — expecting a structural reform growth-induced revenue boon to come later.

There is going to be no particular monetary stimulus as the Reserve Bank’s monetary policy committee (MPC) cuts rates steadily back to around neutral levels (and, if anything, keeping them marginally tight). It will be focusing on lower and more firmly anchored inflation expectations (rightly), worrying about inflation given they do nothing much at all about structural growth issues, and (perhaps a little too much) risk averse on the upside risks to inflation.

Global growth is “OK” but hardly a major positive shock driver to SA (and in any case Transnet doesn’t have the responsiveness to leverage any foreign growth impulses — something that often gets left out of the debates about reform of the industry).

Where, then, is growth going to come from in the short term? There are only three options, all of which are interrelated.

First, there can be a generalised sentiment shock with households starting to consume and businesses starting to invest. There is some early evidence of this in the data, but it’s really slight so far. Households and small, medium and micro enterprises (SMMEs) are probably asking the same questions we look at below before making big decisions. In any case, the labour market is coming from a pretty weak place in the first half (a little weaker than we might have expected nine months ago). There is still some rebuilding of household balance sheets to occur collectively through midyear before we can see a major consumption spurt.

The second option is if there is a broad opening of taps by banks. There has not really been a major credit impulse into the economy of any major size since the unsecured credit boon seven or eight years ago or so (ignoring the post-Covid bounce, which was not huge).

Banks seem broadly ready to pull the trigger if there are green shoots evident, if there is a sense of political stability of the GNU and within the ANC. The problem is the chicken and egg logic. Banks may well be ready to increase supply, but the economy (households and businesses) needs to be ready to demand more credit. The latter hasn’t clearly happened yet.

The GNU and elections happened at an awful time, with businesses, especially in their forward planning, having become (overly) stuck in a pessimistic rut. As such, people struggle to do a major about-turn midyear. Board and strategy C-suite planning for the year ahead — often kicking off through September and October — is therefore important if there are to be some animal spirits released into investment decisions for 2025 and so demand for credit for investment. (Does anyone in the GNU actually understand that businesses work in these cycles and so timing is important?)

Where is a set piece economic speech from President Cyril Ramaphosa or trade, industry & competition minister Parks Tau? The medium-term budget policy statement is not this event — the Treasury does not do all the bits of economic policy that actually need shifting here. We might therefore see growth only a little later, even if its seeds are being planted now.

The final element is a more subtle, and in some sense important, driver: the flattening of the yield curve as the Treasury charges home with fiscal credibility and primary surpluses (combined with the stronger rand as an indicator of risk more than its impact on import buying power) has the ability to reprice risk and investment in the economy for the first time in a while. Too many people in the markets — and the government — seem to forget that the steepness of the yield curve is a relatively recent phenomenon through the end of state capture and particularly after Covid. Before the Jacob Zuma administration, the yield curve was flat and at points inverted (sharp intake of breath from readers) caused by decent growth rates and primary surpluses on the fiscus.

All three are interrelated. A flat curve can drive sentiment; sentiment in markets can drive a flatter curve; a flat curve can increase credit demand.

What then are the things that are needed to unlock this for 2025, if not for right now, into the growth numbers?

The first concern people have is GNU stability, in particular fears of contagion from the mess in Gauteng. I think people overplay the Gauteng situation risks for national — the KwaZulu-Natal example is the counterfactual, after all. Still, we remain concerned about the lack of a coalition agreement that covers policy issues (the Medium-Term Strategic Framework is being written by civil servants without any form of coalition agreement to reference) and a sense of the “logistics” of the coalition and how the game of politics can play out within the cabinet structure.

This is crucial to ensure fights are well managed and around issues such as how cabinet collective responsibility works, in particular in the run-up to the local elections in 2026. While my baseline remains that the GNU can last the full five years, the risks of collapse are certainly higher without such an agreement. Indeed, a real agreement (not the handwaving statement of GNU intent in June) was precisely the advice from the Mapungubwe Institute for Strategic Reflection to the ANC before the elections.

The second concern is Rama-xit. Recall starts in 2028 after the ANC elective conference and is a real possibility (indeed it’s my baseline), but that is still four-and-a-half years away — during which time a lot of positive things can happen. And then we must think through the complexities of what comes after Ramaphosa — there is a route to a sensible candidate emerging. People probably put too low a probability on this. Phala Phala as a route to Rama-xit seems a remote tail risk: no new information or evidence has emerged, even if it might be popular consensus that “something fishy went on”.

Then people are struggling with the complexity of the logistics reform process. Reform here, what it entails and what it means, is far newer and has been reached as a policy consensus of the government (which Transnet must obey through instructions from its shareholder). The most complex thing is timelines. The turnaround will be slow even if steady. Transnet’s PR drive on its volumes projections don’t help compared with the more realistic position of the government. Expectations need to be appropriately set all round with key reform timelines and milestones communicated and ticked off as met.

When it comes to electricity, people are still quite sceptical that load-shedding has ended. This will take time to shift — though some scepticism, or at least proactive risk aversion on sabotage being lower — is not unhelpful here. The problem is that the pace of rooftop solar installation has collapsed, while the utility-scale private market has meaningfully slowed too. There must be a redoubling of communications that continued pace is needed to ensure there aren’t load-shedding gap problems further out as growth recovers.

All of these things are solvable with time and careful communications and expectation management. Now is the time for the GNU to lock and load to get the fruits of growth in 2025.

• Peter Attard Montalto leads on political economy, markets and the just energy transition at Krutham, a SA research-led consulting company.