(Bloomberg) — FirstRand Ltd. has turned more bullish on South Africa’s economy, and now sees a greater chance of economic growth accelerating to 2% and the rand strengthening to below 16 per dollar next year.

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South Africa’s largest lender by market value lifted the probability of its bull-case scenario unfolding to 25%, from 20%, in a report published Monday by its investment-banking unit RMB. The bear-case probability was reduced to 25%, from 30%.

Under its base-case scenario, which carries a 50% probability, RMB sees the economy expanding 1% this year and 1.8% next year as improved electricity supply and government reforms boost output. In comparison, the South African Reserve Bank forecasts growth of 1.1% this year and 1.6% the next.

RMB’s base case sees the rand strengthening to 17.25 per dollar by the first quarter of 2025, even as the central bank cuts interest rates by 25 basis point at each of the next four policy meetings, according to the report. The currency has gained 5.1% this year to trade around 17.47 per dollar on Monday.

“We expect load-shedding to improve compared to 2023,” the report said, using the local term for planned power outages. “We are optimistic about energy reforms, while work continues on railways, roads, ports and water.”

In the bull-case scenario, however, growth is seen at 1.5% this year and 2% in 2025, with “a sharp rand recovery” seeing the local unit hitting 16 per dollar “over the course of 2025” as “structural reforms start showing meaningful responses in economic activity.”

Under the diminished bear-case scenario, electricity shortages worsen along with logistical challenges. That would see economic growth at 0.6% this year and 0.8% the next, according to the report. The rand would likely weaken to above 19 per dollar.

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