South Africa’s Q3 Growth Slows, but Investment Uptick Signals Recovery Potential
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South Africa’s economy expanded 0.5% quarter-on-quarter in the third quarter of 2025, matching forecasts in a Reuters poll but slowing from a revised 0.9% in the previous quarter, Statistics South Africa reported. Nine of ten sectors recorded higher output, led by mining and agriculture, while manufacturing growth eased and electricity, gas, and water production declined.
The economy’s long-term growth remains weak, averaging below 1% annually over the past decade, but stronger investor sentiment has emerged amid fiscal reform and the government’s decision to narrow its inflation target for the first time in 25 years. The National Treasury expects GDP growth of 1.2% in 2025 and 1.5% in 2026.
Gross fixed capital formation rose 1.6%, the first quarterly increase in a year, driven mainly by higher transport equipment investment and supported partly by public spending. Standard Bank’s head of South Africa macroeconomic research, Elna Moolman, said the improvement could help sustain future economic acceleration.
GDP grew 2.1% year-on-year, exceeding the 1.8% forecast. Rising fixed investment, ongoing fiscal adjustment, and lower inflation expectations have supported renewed interest in South African equities and bonds, though energy shortages, weak manufacturing, and high unemployment continue to restrain growth prospects.
