SA economy barely budged in first quarter
2025 didn't kick off well for South Africa's economy, with the gross domestic product (GDP) growing only 0.1%, slower than the 0.4% growth in the fourth quarter of 2024.
Economists surveyed by Reuters had anticipated that GDP would remain flat compared to the fourth quarter. The economy grew by only 0.6% in 2024, from 0.7% in 2023.
The first-quarter economy was 0.8% larger than a year before, after taking inflation into account.
Agriculture was the star performer in the first three months of 2025, growing by almost 16%.
Statistics SA
'Good rains contributed to the industry's fortunes, with horticulture benefitting the most. Animal products also fared well,' Statistics SA said a statement.
Earlier this year, Statistics SA was forced to make a large revision to controversial farming-sector data.
Without the boost from agriculture, the economy would have contracted by 0.3%.
The transport sector also grew in the first quarter. Household demand bolstered the economy, with increased spending on vehicles, food, non-alcoholic beverages, restaurants and hotels, and health.
However, this did not succeed in boosting manufacturing, with only three of the 10 manufacturing divisions seeing growth: textiles and clothing; wood, paper and publishing; and radio, television and communication and professional equipment.
Mining also saw a big contraction, with Statistics SA reporting that platinum group metals were the most significant detractor.
'Coal, chromium ore, gold, copper and nickel also disappointed. Iron ore, manganese ore and diamonds recorded gains, but not enough to lift the industry into positive territory.'
Concerningly, gross fixed capital formation - the total value of new investments in physical assets like buildings, machinery, equipment, and infrastructure - declined by 1.7%.
The financial sector remained the largest in the economy.
Statistics SA
Hopes dashed
At the start of 2025, there was some optimism that the SA economy would finally pick up momentum this year.
But this faded as uncertainty about the near collapse of the government of national unity discouraged corporate investments. Load shedding returned in January, with infrastructure constraints — particularly in rail and the ports — hampering the economy.
In addition, US President Donald Trump started sabre-rattling on tariffs since returning to office in January. Even before he launched a full-blown trade war in April, the uncertainty subdued spending and investment appetite across the world. Some of SA's key exports took a knock, which will only be worsened by the effective loss of AGOA's duty-free access to the US market from April.
In January, the SA Reserve Bank expected the SA economy to grow by 1.8% this year. But by last week, this had been slashed to 1.2%. This is still above many other forecasts.
Nedbank economists expect growth to pick up during the remainder of the year, thanks to stronger domestic demand.
Households are enjoying the benefits of cooler inflation, cheaper fuel prices, and lower debt service costs thanks to interest rate cuts.
But Nedbank warns that SA companies face high costs due to underlying inefficiencies and significant infrastructure constraints. 'Accelerating structural reforms is the key to enhancing the international competitiveness of industries. This would enable the economy to grow faster and create more jobs without hitting supply bottlenecks, driving up costs, and stoking inflation.'
Nedbank's economists expect growth of 1% in 2025 and 1.5% on average over the next three years. 'However, the uncertain global environment and implicit collapse of AGOA pose significant downside risks.'
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