In the third quarter of 2025, South Africa registered a modest economic expansion, recording a 0.5 per cent increase in real gross domestic product (GDP) compared with the preceding quarter. This marks the fourth straight quarter of growth, the longest run of uninterrupted expansion since 2021, yet the upward trend remains fragile, reflecting structural headwinds that continue to restrain a robust economic rebound.
On an annual basis, GDP grew by 2.1 per cent over the third quarter, a figure that exceeded the 1.8 per cent forecast by economists, offering a modest but meaningful signal that some stabilisation may be underway. The positive momentum largely stems from gains across nine of the ten sectors tracked by Statistics South Africa (Stats SA), with the most notable contributions coming from mining, agriculture, and trade and services.
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Mining and quarrying led the way with a 2.3 per cent increase in output during the quarter, driven by higher production of platinum-group metals, manganese ore, coal, chromium ore and copper, even as production of iron ore, diamonds, nickel and gold slipped slightly. Agriculture, forestry and fishing followed with a 1.1 per cent rise, underpinned by stronger yields in field crops, horticulture and animal products. Trade, catering and accommodation, covering retail, wholesale trade, motor trade, hotels and food services, also sustained growth, marking the fourth consecutive quarter of expansion in that cluster.
On the expenditure side of the economy, several indicators pointed upward. Household consumption rose for the sixth quarter in a row, supported in part by increased spending on transport and new vehicle sales. Gross fixed capital formation, a key proxy for investment, grew by 1.6 per cent, the first increase in a year, fuelled by investment in transport equipment and non-residential construction, as well as ICT assets. Exports edged up by 0.7 per cent, aided by rising shipments of mineral and agricultural products. Government spending and increased activity in transport, storage and communications also contributed positively to overall demand.
But not all sectors fared well. The electricity, gas and water industry contracted by 2.5 per cent, a stark reminder of persistent structural challenges, especially in the energy sector, where supply constraints remain a drag on growth. Manufacturing too contributed less to growth, and the mixed performance underscores the unevenness of the recovery.
Context, Opportunities and Risks
Viewed against a global backdrop, South Africa’s latest figures tell a story of cautious stabilisation rather than a full-blown recovery. The 0.5 per cent quarterly growth rate may seem modest by the standards of more dynamic emerging markets, but in the context of a persistent decade-long struggle, during which annual average GDP expansion has hovered below 1 per cent, it represents a tentative step forward.
The recovery appears increasingly reliant on traditional sectors such as mining and agriculture, as well as renewed investment in fixed capital and consumption-driven demand. If the uptick in fixed investment, especially in transport, infrastructure and ICT, proves sustainable, South Africa may be laying the groundwork for structural diversification and medium-term growth.
Nevertheless, risks remain pronounced. The contraction in electricity, gas and water output highlights systemic issues in the energy and utilities sector that could continue to undermine both industrial output and investor confidence. Moreover, manufacturing’s tepid performance suggests that labour-intensive industry, often seen as crucial for job creation and inclusive growth remains vulnerable.
Globally, South Africa enters a precarious phase. With many economies facing slowing growth, rising borrowing costs and volatile commodity markets, external headwinds could dampen demand for South African exports. Domestically, the heavy reliance on mining and agriculture underscores a need for deliberate policy to diversify the economy and reduce structural vulnerabilities.
What Lies Ahead
For 2025, forecasts from government and economists suggest the country may end the year with GDP growth of around 1.2 per cent, with a modest acceleration to 1.5 per cent expected in 2026, a projection that will depend heavily on whether investment and consumption momentum holds, and whether structural weaknesses are addressed.
If fixed investment continues to rise, supported by both private and public sector projects, particularly in infrastructure, transport and ICT, surface conditions could improve for broader economic transformation. A stable energy supply, reforms in power and utilities, and a policy environment conducive to manufacturing and industry would further help shift South Africa from stop-start growth to a more sustainable trajectory.
Yet, for the pace of transformation required to meaningfully address unemployment, inequality and social exclusion, GDP growth will need to reach well beyond the 1-2 per cent range. For now, South Africa’s economy stands at a crossroads: showing signs of awakening, but still in need of structural reforms, disciplined policy, and a sustained commitment to long-term investment.
