‍Maarten Ackerman, Chief Economist at Citadel

South Africa’s (SA’s) economy grew by 0.8% in the second quarter of 2025, lifting annual growth to 0.6%, according to Q2-2025 gross domestic product (GDP) data released today. While this marks an improvement on the weak 0.1% expansion recorded in the first quarter, the pace of growth remains insufficient to keep up with population growth, leaving the country in a per capita recession.

“Today’s GDP print confirms that the economy is showing resilience in the face of global and domestic challenges,” says Maarten Ackerman, Chief Economist at Citadel. “However, annual growth of just 0.6% is still about one percentage point below population growth, highlighting the structural constraints preventing SA from reaching its true potential.” He cautions.

Figure 1: Source: Stats SA GDP figures for Q2 2025

SECTOR PERFORMANCE

Key industries provided some bright spots:

• ‍Mining rebounded after several negative quarters, making one of the strongest contributions to overall growth.‍
• Agriculture delivered another standout performance, with output now contributing nearly 5% of GDP, ahead of electricity (4%) and construction (2%).
• ‍Manufacturing posted meaningful growth from a very low base, emerging as the third-largest contributor.

“The easing of domestic bottlenecks also played a role,” notes Ackerman. “Load-shedding was minimal, which supported several industries and there were tentative improvements in logistics.”

Figure 2: Source: Stats SA GDP figures for Q2 2025

CONSUMPTION VS. INVESTMENT

On the expenditure side, household consumption rose 0.8% in the quarter, its sixth consecutive gain. Growth was broad-based across spending categories, highlighting the importance of resilient consumers in a demand-driven economy. Government consumption also increased.

The biggest concern, however, remains gross fixed capital formation, which contracted by 1.4%, its third consecutive decline.

“Investment has lost momentum after the solar boom and this is the critical missing piece of SA’s growth puzzle,” cautions Ackerman. “Without higher levels of fixed investment, growth will remain stuck below 1%, leaving fiscal flexibility constrained and keeping credit ratings under pressure.”

Figure 3: Source: Stats SA GDP figures for Q2 2025

OUTLOOK

Ackerman cautions that while SA has clear pockets of resilience, unlocking sustained recovery depends on decisive implementation of structural reforms and policies that encourage private-sector participation.

“Until we see a turnaround in investment, budgets will remain tight and ratings agencies unconvinced,” he says.

On the monetary policy, Ackerman points out that weak growth, contained inflation and the United States (US) Federal Reserve’s (Fed) move to start cutting rates could give the South African Reserve Bank (SARB) room to consider a rate cut later this month and in the coming months.

CONCLUSION

“SA Q2-2025 GDP results signal cautious optimism and have shown that the economy can deliver short-term recoveries even against a difficult global backdrop,” says Ackerman. “But lasting growth requires unlocking fixed investment, addressing structural barriers and ensuring reforms translate into tangible economic activity,” concludes Ackerman.