South Africa’s economy remains under significant pressure, with the latest economic indicators reflecting minimal growth and widespread contractions across critical sectors.
According to Statistics South Africa’s economic overview for June, GDP grew by just 0.1% in the first quarter of 2025. While the agricultural sector posted strong results, this growth was not enough to counterbalance significant downturns in mining and manufacturing—two pillars of the economy.
Sectors like transport, trade, and finance reported modest gains on the production front. However, these improvements were neither widespread nor impactful enough to change the overall trajectory. On the spending side, household consumption continued to show resilience, increasing for the fourth straight quarter.
Exports experienced a slight boost, partly due to inventory reductions. However, this was offset by rising import levels, a decline in public sector spending, and a notable decrease in infrastructure investment—factors that are essential for supporting long-term economic development.
Further compounding the economic difficulties was a sharp decline in formal business turnover. Stats SA’s Quarterly Financial Statistics survey revealed a 4.7% drop in overall turnover during the first quarter of the year compared to the last quarter of 2024. Out of eight main industry groups, six reported reduced earnings, with only the personal services and construction sectors showing any positive movement.
The downturn reflects a tough business climate, aggravated by soaring production costs, ongoing power supply issues, and persistent transport and logistics bottlenecks.
The outlook for the second quarter also appears dim. April data showed year-on-year declines across nearly all major sectors, including mining, manufacturing, construction, wholesale trade, vehicle sales, and both freight and passenger transport. Even electricity output stagnated, further emphasizing the overall slowdown in activity.
In May, the manufacturing sector saw a modest 0.5% year-on-year increase, with five of the ten manufacturing subsectors reporting gains. Notably, basic iron and steel, non-ferrous metals, and machinery production were key contributors to this slight uptick, rebounding from a sharp 6.4% drop in April. These figures beat Bloomberg’s forecast, which had predicted another contraction.
Despite this glimmer of improvement, Investec economist Lara Hodes warned that the recently imposed 30% tariff on South African exports to the United States poses a serious threat to domestic industries—particularly manufacturing. She noted that this development would likely dent already fragile business confidence, slow expansion plans, and hinder job creation.
Meanwhile, mining output declined by 7.7% in April compared to the same month in 2024. While certain minerals like diamonds, iron ore, and manganese posted gains, sharp drops in platinum group metals, gold, coal, copper, and nickel pulled the sector into negative territory.
Consumer spending remains one of the few bright spots. Retail trade grew for the 14th consecutive month, driven by strong performance from general dealers and apparel retailers. However, the hardware and building supplies segment saw a drop.
While household consumption continues to sustain demand, the broader economic picture remains concerning. Low investment levels, declining industrial productivity, and eroding business sentiment point to deeper structural challenges still facing South Africa’s economy.
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