South Africa’s economy posted a modest recovery in the second quarter of 2025, with gross domestic product (GDP) growing by 0,8% between April and June, Statistics South Africa announced on Tuesday.
The growth comes after a sluggish 0,1% increase in the first quarter, and offers some relief for an economy still battling structural weaknesses, load shedding, and global market volatility.

Key Drivers of Growth

The manufacturing industry was one of the main drivers of growth, expanding by 1,8% and contributing 0,2 percentage points to overall GDP. Seven of ten manufacturing divisions reported positive growth. The strongest gains were in petroleum and chemical products, plastics and rubber, as well as the motor vehicles and transport equipment sectors.

The trade, catering and accommodation sector also grew by 1,7%, contributing another 0,2 percentage points. Retail trade, restaurants, hotels, and food and beverage services all reported increased activity—signs that household demand may be stabilising after months of pressure from high inflation and rising interest rates.

The mining and quarrying sector recorded the sharpest improvement, rising by 3,7% and contributing 0,2 percentage points. Platinum group metals, gold, and chromium ore drove the uptick, buoyed by improved global demand and slightly firmer commodity prices.

In contrast, the transport, storage and communication industry contracted by 0,8%, pulling growth down by 0,1 percentage point. Declines in land transport and support services were to blame, reflecting continued logistical bottlenecks at Transnet.

The construction sector also weakened, falling by 0,3% due to declines in both residential and non-residential building activity.

Expenditure Side of the Economy

On the expenditure side, household final consumption expenditure (HFCE) increased by 0,8%, contributing 0,6 percentage points to GDP growth. Strong spending was reported in restaurants and hotels (4,8%), clothing and footwear (3,4%), transport (0,7%), and communication (1,1%).

However, spending on housing, utilities, alcohol and tobacco declined, highlighting the uneven nature of household demand.

Government consumption expenditure rose by 0,7%, largely due to increased spending on goods and services as well as employee compensation.

One area of concern is gross fixed capital formation, which declined by 1,4%, subtracting 0,2 percentage points from growth. Investment in transport equipment, non-residential buildings, and other assets fell sharply. Analysts warn this signals ongoing weakness in long-term investment, undermining future growth prospects.

Inventories, however, provided a small cushion: a R16,6 billion build-up across mining, manufacturing, and transport added some momentum.

Net exports were a drag on the economy, subtracting 0,3 percentage points from GDP. Exports of goods and services fell by 3,2%, driven by weaker trade in metals, agricultural products, and vehicles. Imports decreased by 2,1%, reflecting subdued domestic demand for machinery, chemicals, and minerals.

Comparison with Last Year

The second quarter performance marks an improvement compared to the same period in 2024, when GDP contracted by 0,2% due to crippling load shedding, port congestion, and weaker commodity prices.
In 2024, the economy narrowly avoided a technical recession after alternating between small contractions and weak growth. Agriculture and mining had performed poorly last year, while consumer demand was hit by high inflation, which averaged 6%.

By contrast, the 2025 numbers suggest a fragile but noticeable rebound, especially in mining and consumer-facing sectors. Still, the economy remains far below the annual growth target of 3% set out by National Treasury.

Analysts Weigh In

Economists cautioned against reading too much into the quarterly recovery. “The 0,8% growth is welcome, but it remains fragile,” said economist Lumkile Mondi. “Investment is contracting, exports are falling, and structural constraints like electricity shortages and port inefficiencies are still holding back potential.”

Political analyst Khaya Sithole noted the connection between weak governance and economic stagnation: “South Africa continues to face policy drift and political meddling. While mining and trade show resilience, the lack of decisive reforms in logistics, energy, and investment policy is keeping the economy trapped in low growth.”

The Road Ahead

Government has pinned its hopes on ongoing reforms in electricity, logistics, and investment promotion to unlock higher growth. The modest second-quarter performance may strengthen the case for accelerating these measures.

With unemployment at 33.2%, economists stress that growth rates above 2% are needed to make a dent in joblessness.

For now, the 0,8% expansion signals that South Africa is still managing to stay afloat—but without deeper reforms, the country risks remaining stuck in a cycle of underperformance.

South Africa’s GDP at a Glance – Q2 2025

Overall Growth

• GDP grew 0,8% (quarter-on-quarter, seasonally adjusted)
• Q1 2025 growth was 0,1%

Sectors Driving Growth

• Mining & Quarrying: +3,7% (PGMs, gold, chromium)
• Manufacturing: +1,8% (chemicals, plastics, motor vehicles)
• Trade, Catering & Accommodation: +1,7% (retail, restaurants, hotels)

Sectors in Decline

• Transport, Storage & Communication: -0,8% (land transport, logistics)
• Construction: -0,3% (residential & non-residential buildings)

Expenditure Breakdown

• Household spending: +0,8% (restaurants & hotels +4,8%, clothing +3,4%)
• Government spending: +0,7%
• Gross fixed capital formation: -1,4% (investment down in buildings & equipment)
• Net exports: -0,3 percentage points (exports -3,2%, imports -2,1%)

Inventories

• R16,6 billion build-up, led by mining, manufacturing, and transport

Context

• Q2 2024: GDP contracted 0,2%
• Growth remains below the 3% annual target set by Treasury