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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
June 3, 2025

GDP, Economic Growth and Inflation

South Africa Economic Performance

2025 Q1

South Africa’s economy grew by 0.1% in Q1 of 2025, surpassing expectations of a 1.3% contraction. This modest growth occurred despite international trade tensions, US aid suspension, and tariffs. Positively, the interest rate cut in January, a stronger rand, stable confidence levels, and consistent electricity supply contributed to the gains.

Among ten sectors, Agriculture (up 4.1%), Finance (up 3.9%), and Trade (up 1.9%) showed annual growth. Conversely, Transport (-2.4%), Mining (-4.2%), Manufacturing (-2.5%), and Construction (-3.2%) saw contractions. Quarterly, Agriculture surged by 15.8%, Transport rose by 2.4%, while Trade and Finance grew by 0.5% and 0.2%, respectively.

The 2025 growth forecast is 1.0%, lower than earlier predictions of 1.6% to 1.9%. This does not adequately address the unemployment crisis. However, stable confidence, reduced load-shedding, and a further 25-basis point rate cut in May could enhance economic activity later in the year.

Ongoing challenges necessitate policy clarity and progress on structural reforms. Diplomatic relations with the US have improved following President Ramaphosa’s efforts in Washington, advocating for AGOA continuation. A stable rand, low inflation, and resolved US trade issues could boost economic growth beyond current forecasts

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More Coverage

Consumer Inflation – January 2026

South Africa entered 2026 with inflation largely under control, offering some relief to households and policymakers alike. January’s consumer price data indicates modest price pressures and a cautiously stable economic environment, while ongoing global uncertainties and domestic cost drivers continue to shape the outlook for interest rates, consumer spending, and overall economic stability.

Mining Production and Sales for December 2025

South Africa’s mining sector rebounded in December 2025, led by strong iron ore, manganese, platinum, and gold output and sales. Despite a slight quarterly dip in production and ongoing challenges from tariffs and trade tensions, the sector remains vital for employment, foreign exchange, and economic growth.

Manufacturing Production – December 2025

South Africa’s manufacturing sector closed 2025 weaker than expected, with key industries like iron, wood, and food driving declines. Despite a modest quarterly rise, trade tensions and tariffs are weighing on production and business sentiment, though firms hold strong cash reserves.

Harnessing Opportunities Amid Economic Shifts: Some Perspective on South Africa’s Fiscal Future

South Africa’s post-SONA outlook signals cautious optimism: improved investor confidence, infrastructure reform, and commodity gains offer growth potential, but success hinges on strict fiscal discipline, sustainable debt management, and investment-led policies. With debt near 78% of GDP, the upcoming budget must prioritise prudent spending, effective tax compliance, and private-sector-driven growth to ensure long-term economic stability and job creation.
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