Signs of life: SA economy expected to post third straight quarter of growth

South Africa’s economy may be in for a rare run of good news next month, with economists forecasting a third successive quarter of growth when second-quarter GDP figures are released on 9 September. The lift comes from a recovery in two of the country’s most important sectors, manufacturing and mining, although fresh trade tensions could quickly take the shine off the numbers.

A cautious rebound

A Bloomberg poll of economists conducted earlier this month suggests GDP grew by about 0.4% in the April–June period, compared with 0.1% in the first quarter. Old Mutual chief economist Johan Els is more optimistic than most, tipping growth closer to 0.8%.

“If you look at the different sectors, coming from deepened negative performance in mining, manufacturing, and utilities, all of those sectors have turned around quite significantly,” Els explained.

Mining in particular appears to have caught a tailwind from higher commodity prices, partly driven by international buyers stocking up ahead of potential trade disruptions. Platinum and palladium indicators have been on the rise, according to KPMG SA’s Frank Blackmore, who suspects some customers are “buying upfront, worrying about the tariffs.”

The Trump tariff effect

Those tariffs arrived on 7 August, when US President Donald Trump announced a 30% levy on certain South African exports, one of the highest globally. The move has rattled the automotive and agricultural industries and, according to the Department of Trade, could put up to 30 000 jobs at risk.

Oxford Economics senior economist Jee-A Van Der Linde warns that while Q2 data will look healthy, the second half of 2025 may tell a different story. “In the third and fourth quarters, the impact will actually then start to bite. Employment could remain under pressure as businesses come to grips with this new trade environment,” Van Der Linde said.

South Africa’s unemployment rate has already climbed to 33.2%, the highest level in a year. “In this environment, I don’t imagine businesses are going to ramp up production, expand operations, and appoint more people,” Van Der Linde added.

Consumers still spending… for now

Household spending remains a crucial driver of growth, although confidence is under strain from higher electricity costs and global uncertainty. Blackmore says consumers “remain under pressure” despite the small relief from lower inflation and interest rate cuts.

South African inflation has hovered near the bottom of the Reserve Bank’s 3%–6% target range for nine months, giving policymakers space to cut rates by 75 basis points to 7% so far this year. Retail sales grew 0.9% in Q2 after contracting 0.4% in Q1, according to Stats SA data cited by BusinessTech, but economists say that momentum may fade if energy prices keep climbing and tariffs slow the broader economy.

The bottom line

September’s GDP release is set to show a country that, for now, is edging forward. But whether that progress can survive the headwinds of global trade disputes, rising joblessness, and fragile consumer confidence is a question that may define the rest of 2025.

Also read: Good News for SA Drivers: Petrol and Diesel Prices Set to Drop in September

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Source: Business Tech

Featured Image: Econ3x3