Growth was supported by increases in eight of 10 key industries, with major contributions coming from mining, manufacturing, trade and agriculture, while declines were reported in the transport and construction sectors.
(David Harrison)
South Africa’s second quarter GDP growth came in much stronger than expected, reaching its highest level in two years, but economists warned that this is still not enough to bolster the creation of new jobs and lift household incomes.
The economy expanded by 0.8% in the second quarter of 2025, following a marginal increase of 0.1% in the previous quarter, Statistics South Africa said on Tuesday. This was the highest seasonally adjusted quarter-on-quarter rate of expansion since the second quarter of 2023, when GDP also increased by 0.8%.
Growth was supported by increases in eight of 10 key industries, with major contributions coming from mining, manufacturing, trade and agriculture, while declines were reported in the transport and construction sectors.
The government cheered the number as a reflection of a broad-based recovery across key sectors of the economy, saying in a statement: “Amid challenging global economic conditions, these figures demonstrate the resilience of South Africa’s economy. The government views this as a positive sign of the impact of ongoing initiatives to stimulate growth, support local industries and create jobs.”
But economists say it will not translate into material positive changes for the ordinary South African.
“The Q2 GDP rebound is a welcome signal that parts of the economy (notably mining, manufacturing, trade and agriculture) still have the capacity to surprise on the upside,” said Casey Sprake, economist at Anchor Capital.
“Nonetheless, for South Africans on the ground, the reality is that growth remains too low, too narrow and too fragile to meaningfully ease unemployment, reduce inequality or lift real household incomes.
“Without decisive reforms to unlock investment and rebuild confidence, the economy risks remaining stuck in a low-growth trap, where even small gains feel elusive against the weight of structural constraints and everyday cost pressures.”
She added that the second quarter print does not factor in the 30% tariff that the US imposed on South African exports, a move which is likely to hurt the agriculture, automotive, manufacturing and mining industries the most.
“It is important to keep in mind that this latest data release reflects activity prior to the implementation of the 30% tariff hikes that came into force on 7 August,” Sprake said.
“The timing matters — while the Q2 figures offer a snapshot of an economy finding its feet, the impact of higher trade barriers, particularly on the automotive sector and related manufacturing industries, is only beginning to filter through.
“Market expectations point to the brunt of these costs to be visible in subsequent GDP prints, potentially complicating the growth outlook for the remainder of the year.”
Growth is expected to remain modest at 1.3% in 2026 and 2% in 2027, said Sprake, but these levels are “insufficient to meaningfully improve living standards”.
“Political uncertainty within the government of national unity, slow progress on structural reforms and continued inefficiencies in logistics and energy supply further erode both business and investor confidence,” she added.
The pace of growth is not in line with South Africa’s population growth, “leaving the country in a per capita recession”, said chief economist at Citadel Maarten Ackerman.
“Today’s GDP print confirms that the economy is showing resilience in the face of global and domestic challenges. However, annual growth of just 0.6% is still about one percentage point below population growth, highlighting the structural constraints preventing SA from reaching its true potential,” he said.
He noted the boosts from the mining, manufacturing and agriculture sectors and that the “the easing of domestic bottlenecks also played a role”, with tentative improvements in logistics and electricity load-shedding by power utility Eskom being minimal, which supported several industries.
But the gains were “not enough to shift the bigger picture”, Ackerman added.
The challenge for the economy is to attain the growth target of 3% that the government has set for the medium term, said Raymond Parsons, a professor at the North-West University’s business school.
“GDP growth is still expected to be only about 1% for 2025 as a whole and is not good enough for South Africa’s urgent socio-economic needs. As high-frequency data in the third quarter of 2025 still seems mixed, there remain potential vulnerabilities in the present economic outlook,” Parsons said.
“One worrying factor is that exports already showed a negative trend in 2Q 2025, at a time of pending further global uncertainty. Another weak link in the economic scenario is the continued negative performance of fixed capital formation, which is the kingpin of sustained economic growth. SA therefore now needs to build on — and expand — the incipient economic recovery.”
Economists at Standard Bank were cautiously optimistic about the economic outlook although “several constraints remain and new headwinds have emerged that weigh on near-term growth”, said Elna Moolman, the group head of South Africa macroeconomic research at the bank.
“In the near term, we are in particular monitoring the manufacturing sector, which is confronting notable headwinds. We are also cautiously optimistic about the prognosis for infrastructure spending, which is supported by a range of policy and other interventions,” she told the Mail & Guardian.
“Consumer spending should also continue growing at a reasonable pace, though we don’t expect significant new tailwinds apart from possible, albeit modest, further monetary policy easing.”
The South African Reserve Bank cut interest rates to 7% in its July meeting — the second consecutive reduction this year — motivated by the uncertainty of the effects of the US’s tariffs on the local economy.
Reserve Bank governor Lesetja Kganyago said in July the bank had downwardly revised its economic growth forecasts for this year to 0.9% from the 1.7% predicted in January, as the country’s “underlying growth trend remains low”.
Economists are not anticipating notable economic growth for the remainder of the year and this could prompt the Reserve Bank to make another rate cut.
“Weak growth, contained inflation and the United States Federal Reserve’s move to start cutting rates could give the South African Reserve Bank room to consider a rate cut later this month and in the coming months,” Ackerman said.