South Africa’s economy narrowly dodged contraction in the first quarter of 2025, with a modest growth of 0.1% reported by Statistics South Africa. This figure marks a decrease from 0.4% in the previous quarter, signalling persistent concerns among economists about the country’s economic trajectory.
Experts have been quick to voice their unease in the wake of these statistics. Maarten Ackerman, chief economist and advisory partner at Citadel, called the growth figures “not something to celebrate,” noting a troubling pattern of prolonged recession in per capita terms, with full-year growth projected at a mere 0.8%.
Despite the overall dampened outlook, there were pockets of growth; most notably, the agriculture, forestry, and fishing sector expanded by an astonishing 15.8%, contributing 0.4 percentage points to the positive GDP growth. This surge, attributed primarily to increased economic activity in horticulture and animal products, shines a flicker of hope amid broader economic malaise.
The transport, storage, and communication industry, too, recorded an increase of 2.4%, adding 0.2 percentage points to GDP growth due to heightened activities in land and air transport as well as transport support services. Meanwhile, finance, real estate, and business services posted a slight rise of 0.2%, contributing an additional 0.1 percentage points, correlating with improved consumer activities in retail and hospitality sectors.
However, on the flip side, the manufacturing sector shrank by 2%, reflecting a concerning reality as seven out of ten manufacturing divisions reported negative growth. Among the hardest hit were sectors producing petroleum, chemical products, and motor vehicles, leading to a negative contribution of -0.2 percentage points to overall growth.
Professor Raymond Parsons from the NWU Business School elaborated on the disappointing GDP figures, noting that while adverse global factors played a role, weak economic data was already emerging earlier in the year. He cited the Absa Purchasing Managers’ Index, which has lingered in contractionary territory for seven consecutive months, signalling ongoing struggles within the manufacturing sector.
As growth forecasts for 2025 have been adjusted downward by entities such as National Treasury and SARB, Parsons indicated that the overall growth outlook may fizzle to around 1% for the year, climbing slightly to 1.5% in 2026, unless substantial support is mobilised to facilitate a recovery.
Dr Eliphas Ndou from Unisa emphasised the need for coordinated policy action to stimulate growth, warning that persistently lower economic output could exacerbate unemployment and elevate the national debt-to-GDP ratio. “In periods of elevated policy and trade uncertainty, it is crucial to implement measures that can improve economic agents’ optimism,” he urged.