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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
March 10, 2026

South African Economic Performance – GDP, Economic growth and Inflation for 2025Q4

The South African economy grew by 0.4% in the fourth quarter of 2025, slightly below market expectations of 0.7%. This modest growth comes despite positive economic indicators, interest rate reductions, and improved confidence levels during this period. Remarkably, overall, electricity supply constraints did not impede performance in 2025.

Among the ten sectors, seven showed annual growth. Notably, the Agricultural sector increased by 19.9% during the last quarter of 2025, despite US tariffs on imports from South Africa, while the Manufacturing sector contracted by 0.6% during this period. The Finance and Wholesale & Retail sectors grew by 1.4% and 2.6%, respectively, during the fourth quarter of 2025, indicating that lower interest rates, coupled with lower inflation, were starting to work through the economy holistically.  

Overall, South Africa’s economic growth for 2025 is estimated at 1.1%, a notable increase from 0.5% revised growth for 2024, which remains inadequate to address the high unemployment crisis. However, with increased market optimism heading into 2026, even with trade tensions between South Africa and the US and ongoing conflict in the Middle East between the US and Iran, no load-shedding, a lower interest rate, and an inflation rate of 3.5% and a target of 3.0% by the SARB, there is potential for improved economic activity going forward in 2026.

Challenges persist for businesses, and it is crucial for the government to deliver policy clarity and concrete progress on previously announced structural reforms. These structural reforms, coupled with Government infrastructure investment in the February 2026 budget, might just be the spark the South African economy needs for continued growth in 2026. It should however be mentioned that the extension of the AGOA agreement for only 2026 and a possible expulsion of South Africa from this agreement will most likely still threaten South African businesses exporting to the U.S. Addressing these critical issues is essential to boost business confidence further for the year, which is necessary for driving significant economic growth in the coming months—a need that South Africa cannot overlook at this stage.

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Inflation Relief, Real-Economy Headwinds, and the Geopolitical Imperative for South Africa

South Africa has received a much-needed inflation reprieve, with July headline inflation easing to 4.3% and giving the South African Reserve Bank room to hold interest rates steady, but monetary relief alone cannot rescue an economy facing contracting mining and manufacturing sectors, depressed investment, mass unemployment, and mounting pressure on export earnings. This report examines how a 12.5% US tariff and a 56% annualised plunge in exports are intensifying the country’s economic vulnerability, while diplomatic disputes over property rights, empowerment policy, rural safety, political rhetoric, and South Africa’s geopolitical alliances threaten access to the strategically vital US market. It also sets out the practical policy choices, from structural reform and infrastructure investment to pragmatic trade diplomacy, that could determine whether South Africa converts this brief moment of inflation stability into sustainable growth or slips deeper into stagnation

Consumer Inflation – July 2026

South Africa’s July 2026 inflation reading delivered a genuine surprise: consumer prices rose just 4.3% year-on-year, well below June’s 5.0% and under the 4.5% the market had pencilled in, yet the story beneath that headline is far more complicated than a simple cooling trend. Goods inflation has slipped into the SARB’s new 2–4% target band, but services inflation stubbornly holds at 5.0%, revealing that price pressure is now entering the economy through a channel monetary policy struggles to reach. Meanwhile, housing, transport, and financial services drove the bulk of the increase; fuel costs remain elevated amid the renewed Middle East conflict and rising oil prices; and households and businesses relying on short-term credit are dangerously exposed to any shift in rates, the rand, or import costs. Add US tariffs weighing on manufacturing, fragile 0.5% first-quarter growth, and a Reserve Bank that has already wrong-footed markets twice this year, and the run-up to the 23 September MPC meeting becomes anything but predictable. This report unpacks what the numbers actually signal, why the SARB is holding its nerve, and what it will take to tip the next rate decision either way.

Mining Production and Sales for June 2026

South Africa’s mining sector faced renewed pressure in June 2026, with production declining 4.0% amid sharp contractions in iron ore, coal and platinum-group metals, while second-quarter output fell 2.7% as manganese, PGMs, gold and iron ore all weakened. Yet soaring commodity prices, particularly for gold, platinum and chromium, drove a 27.2% increase in nominal mining sales, highlighting the sector’s resilience and continued importance as a source of employment, foreign exchange and economic growth. Against this mixed backdrop, the report examines the industry’s mounting challenges, including job losses, proposed export and import tariffs, the loss of AGOA benefits, uncertainty surrounding the Mining Charter, rising energy costs and geopolitical tensions affecting global trade and shipping. It also considers whether temporary tariff exemptions for key steelmaking minerals can provide much-needed relief to an industry navigating an increasingly volatile global economy.

South African Gold and Foreign Exchange Reserves for July 2026

South Africa’s international liquidity position reveals a complex economic landscape shaped by global geopolitical tensions, commodity price dynamics, and evolving trade relationships. While Net Gold and Foreign Exchange Reserves showed modest growth in July 2026, buoyed by historically elevated gold prices and strategic central bank interventions, underlying pressures, including Middle East conflict-driven fuel costs, currency volatility, and shifting US trade policies, threaten inflation stability and monetary policy decisions in the months ahead. This comprehensive analysis examines how commodity trends, Reserve Bank operations, and international developments are converging to shape South Africa’s economic trajectory, offering critical insights into what investors, policymakers, and businesses should monitor as the country navigates tariff uncertainties, geopolitical risks, and the critical third-quarter interest rate decisions that could define economic performance for the remainder of 2026.

Manufacturing Production – June 2026

South Africa’s manufacturing sector came under renewed pressure in June 2026, with production declining by 1.7% following strong growth in May. The contraction was driven mainly by weaker output in food and beverages, wood products, and motor vehicles and transport equipment. Manufacturing production also fell by 1.5% in the second quarter, with seven of ten sectors recording declines. Despite subdued production, manufacturing sales increased by 0.6% during the quarter, supported by stronger sales in chemicals, petroleum, rubber and plastics, as well as motor vehicles. However, declining employment and a PMI below the 50-point threshold highlight growing caution among manufacturers. Ongoing US trade tariffs and diplomatic tensions are adding further pressure, while businesses continue to maintain high cash reserves as they navigate domestic and global economic uncertainty.