The PayInc Economic Index continued its upward trend in October, coinciding with a record high for electronic transactions processed through PayInc.
Yet, despite this stronger activity, economic growth remains constrained, among others, a symptom of anaemic investment growth. Higher investment remains vital to unlock sustainable growth and uplift both businesses and livelihoods in the medium-term.
“The PayInc Economic Index reached 103.0 in October 2025, a 0,8% improvement on September’s level – and a 4% hike on year ago levels,” says Shergeran Naidoo, head of Stakeholder Engagements at PayInc.
The notable uptick in economic activity in October indicates that improvement has spilled over into Q4.
“Despite numerous challenges and ongoing uncertainties, the economy is still showing remarkable resilience with a few sectors outperforming and carrying the economy forward,” says independent economist, Elize Kruger.
However, at a tepid growth rate of around 1%, the business environment remains constrained, with the economy failing to create enough jobs to tackle persistently high unemployment.
According to Kruger, to lift the economy’s growth potential in a sustainable manner in the medium- to longer-term, significantly higher levels of investment spending is needed. To this extent, there are some notable developments evident in the economy, mostly driven by structural reforms in multiple sectors, that will push investment spending higher in coming years.
Structural reforms continue to drive progress across key sectors. The updated Integrated Resource Plan (IRP2025), published on 28 October 2025, marks a major shift from coal to renewables, gas, storage, and nuclear power – placing the private sector at the forefront. Government estimates R2,2-trillion in investment will be needed by 2042, focused on large renewable projects, gas-to-power, storage, and nuclear development.
In the transport and logistics sector, Transnet has embarked on a capital expenditure programme worth about R127-billion to improve the performance of rail networks.
While interventions are also evident in other sectors such as water, implementation remains South Africa’s Achilles heel. The Nedbank Capex Survey, which tracks planned fixed investment projects, showed a sharp decline in new investment for the first half of 2025 to an annualised R316,2-billion, down from R592,2-billion in 2024. This is largely due to a pause in new government and public corporation projects after a surge in 2024, with private sector investment placed as the sole driver of new plans.
The downward trend evident in South Africa’s Gross Fixed Capital Formation (GFCF) to GDP ratio, has been an important factor explaining the lacklustre growth in the economy over the past 10 years, explains Kruger.
Other timeous economic indicators showed mixed signals. Naamsa revealed that the strong performance of vehicle sales continued robustly in October 2025. Total vehicle sales improved by 16,0% YoY in October 2025, with year-to-date sales up by 15,7% compared to a year earlier. New car sales in October grew by 14,8% YoY and year-to-date were 21,3% ahead.
The S&P Global South Africa Purchasing Managers’ Index (PMI) slipped to contractionary territory with an index level of 48.8 in October, down from the 50.2 in September. Operating conditions in the South African private sector declined for the first time in seven months in October as firms saw renewed downturns in output and sales. The report notes that the slowdown occurred despite a historic improvement in supplier delivery times and one of the softest levels of cost pressures since mid-2020.
Similarly, the seasonally adjusted Absa Purchasing Managers’ Index (PMI) slipped to 49.2 in October 2025, returning to contractionary territory after only a single month above the 50-index level so far in 2025.
The manufacturing sector’s performance remains under pressure, with respondents commenting that domestic demand is quieter than usual at this time of the year. On the export front, demand is also sluggish, complicated by the rise in US trade tariffs and logistical challenges.
Transactions cleared through PayInc hit a record 188,9-million in October, up 12,6% YoY and surpassing the previous high of 181,1-million in September, according to Naidoo.
Volumes rose across all payment streams except EFT debits. The nominal value of electronic transactions increased to R1,46-trillion, while cash supply to banks also grew, highlighting that even as digital payments surge, cash demand remains resilient.
“While the underlying resilience evident in the economy – reflected in the PayInc Economic Index’s uptick – remains encouraging the economic growth rate is still stuck around 1%, keeping the economy firmly in a narrative of ‘muddling-along’,” says Kruger. “As long as economic growth remains below population growth, South Africans are worse off year by year.”