South Africa’s economy saw a notable uptick with real GDP growth of 0.8% during the second quarter of 2025. This marks a welcome recovery after a rather stagnant first quarter, where growth was just 0.1%. The latest figures from Statistics South Africa highlight a promising trend in key sectors, signaling potential stability ahead.
The expansion was notably fueled by gains in manufacturing, mining, and trade-related sectors. On the demand side, household consumption and a drop in imports played significant roles in supporting this growth trajectory.
Supply Side: Eight Industries Expand
During the second quarter, a robust performance from a total of eight industries was recorded, particularly:
- Manufacturing experienced a rebound, expanding by 1.8% after two quarters of contraction. The automotive, petroleum, chemical, rubber, and plastics sectors were primary contributors to this growth.
- Mining and quarrying surged with a remarkable 3.7% increase, the fastest rate since Q1 2021. This growth was primarily due to heightened production levels of platinum group metals, gold, and chromium ore.
- Trade, catering & accommodation noted a 1.7% rise, reflecting increased consumer engagement across retail, motor trade, accommodation, and food service sectors.
Agriculture also continued its positive trend, with a growth rate of 2.5%. This was largely attributed to exceptional performance in both horticulture and animal products.
Construction and Transport Lag Behind
However, not every sector benefitted from the overall growth. Specifically:
- Construction faced challenges, contracting for the third consecutive quarter. This downturn is attributed to persistent weakness in both residential and non-residential building activities.
- Transport, storage & communication also saw a decline, driven down by sluggishness in land transport and transport support services.
Demand Side: Households Boost Spending
On the expenditure front, significant shifts were observed:
- Household consumption grew by 0.8%, marking its fifth consecutive quarterly increase. The miscellaneous category saw the largest contribution, particularly in spending on insurance.
- Consumers also increased their expenditure on restaurants & hotels and clothing & footwear. However, there were noticeable declines in spending for alcohol, tobacco, narcotics, and housing-related utilities.
In a positive shift following prolonged inventory reductions, the economy added R16.6 billion to stock levels, largely in the mining, transport, and manufacturing sectors. This change indicates a bounce-back in supply chains and production activities.
Imports and Exports Decline
However, the trade landscape showed some downturns:
- Imports decreased by 2.1%, primarily due to lower demand for chemicals, machinery, mineral products, and vegetable products.
- Exports also weakened, with notable declines registered in base metals, vegetable products, and transport equipment (excluding large aircraft).
Outlook
Despite the promising growth figures in the second quarter, the South African economy faces ongoing structural challenges, particularly in sectors like construction and logistics. As we move forward, economists are keeping a careful watch on how global commodity prices and local consumer confidence will shape the economic landscape in the second half of the year.
