South Africa’s economic growth slows

South Africa’s economic growth slowed in the third quarter of 2025 as expected, but analysts heralded a pickup in fixed investment for the first time in a year as a bright spot that could lift the future growth rate if sustained.

Africa’s biggest economy grew 0.5% in seasonally adjusted quarter-on-quarter terms, in line with the median forecast of analysts polled by Reuters but slower than revised second-quarter growth of 0.9%.

Nine of the 10 sectors tracked by Statistics South Africa recorded higher output, with mining and agriculture performing well though manufacturing production slowed and electricity, gas and water output contracted.

The economy has struggled to build momentum over the past decade, with annual gross domestic product (GDP) growth averaging less than 1%.

This year the picture has started to brighten, as investors have piled into South African stocks and bonds on signs of fiscal discipline and a decision to lower the country’s inflation target.

The National Treasury forecasts a slight pickup in growth this year and next, to 1.2% in 2025 and 1.5% in 2026.

Investments in transport equipment mainly drove the 1.6% increase in gross fixed capital formation – spending on fixed assets like machinery – in the third quarter.

Elna Moolman, head of South Africa macroeconomic research at Standard Bank, said though this increase was mainly driven by government spending, it was a positive sign that showed the economy had good prospects of accelerating in coming years.

In year-on-year terms, GDP expanded 2.1% in the third quarter, better than economists’ forecasts for 1.8% growth.  

• Reporting by Kopano Gumbi;Additional reporting by Sfundo Parakozov; Editing by Alexander Winning and Frances Kerry