By Kopano Gumbi

JOHANNESBURG, Sept 15 (Reuters) - South African

financial markets have outperformed expectations, with the

Johannesburg Stock Exchange (JSE) reaching record highs and the

rand/dollar exchange rate rising despite a threat to exports

from 30% U.S. tariffs.

However, growth in Africa's largest and most industrialised

economy has been stuck at around 1% for a decade and the outlook

is uncertain, despite promises of reforms from the coalition

government put together a month after May 2024's election.

These include reforms on freight and rail, boosting power

generation and improving skills for South Africans left out of

the job market.

GROWTH

Business indices show private sector hesitation to invest. South

Africa's economy grew 0.8% in the second quarter of 2025, its

fastest in two years.

The government wants 3% growth within three years. The

central bank forecasts 2% by 2027.

EMPLOYMENT

South Africa has one of the highest unemployment rates in the

world, at 33.2% in the second quarter.

Minister of Employment and Labour, Makhosazana Meth, told

Reuters economic uncertainty meant nearly 100,000 jobs could be

shed this year as companies like ArcelorMittal, Goodyear and

Ford South Africa lay off workers. She wants to provide 240,000

South Africans with job opportunities this year.

REFORMS

Years of mismanagement of key state institutions, notably state

power utility, Eskom, have hindered growth. In the past year,

the power supply has stabilised after years of blackouts.

Interventions to improve operations at the ports and freight

rail company Transnet are slowly bearing fruit too.

FINANCIAL MARKETS

South African financial markets' strength over the past year is

an "inconsistency" not easily explained, says Kevin Lings, chief

economist at Stanlib.

He said local asset managers see equities as relatively

cheap. The JSE has remained above July's 100,000-point high.

Miyelani Maluleke, an economist at ABSA CIB, cites robust

gold and platinum group metal prices. Meanwhile, ending a

protracted row within the coalition over the budget boosted the

rand.

"There's definitely less concern around government ...

stability right now," Maluleke said.

"Reform is improving ... some of the areas that have been

big challenges," he said.