South Africa’s economy barely avoided contraction in the first quarter of 2025, posting meagre 0.1% quarter-on-quarter growth as persistent structural constraints continued to weigh on output.
The marginal expansion, slightly better than Reuters economists’ forecast of zero growth, highlights the ongoing fragility of Africa’s most industrialised economy, which has averaged less than 1% annual growth over the past decade.
A 15% surge in agricultural output provided the sole bright spot, preventing an overall contraction. However, this was offset by significant declines in mining (-4%) and manufacturing (-2%), underscoring the economy’s uneven recovery.
Statistics South Africa simultaneously revised downward its fourth-quarter 2024 growth estimate to 0.4% from 0.6%, painting a picture of decelerating momentum.
Statistician-General Risenga Maluleke voiced concern about the economy’s precarious position, warning that current growth levels leave South Africa vulnerable to slipping into negative territory.
While the coalition government formed in 2024 has boosted business and consumer confidence, tangible economic improvements remain elusive. Critical infrastructure challenges—particularly chronic inefficiencies at ports and on freight rail networks—are only being resolved gradually, continuing to constrain economic activity.
The weak performance strengthens arguments for monetary policy easing, with Capital Economics noting the data supports the case for additional interest rate cuts. This comes after the South African Reserve Bank last week downgraded its 2025 growth forecast to 1.2% from 1.7%, reflecting growing pessimism about the near-term outlook.
Year-on-year, first-quarter GDP grew 0.8%, marginally exceeding expectations. However, the minimal quarterly expansion suggests South Africa’s economy remains trapped in low-growth mode, unable to capitalise on improved political stability or overcome deep-seated structural obstacles.
