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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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