South Africa’s economy registered a stronger performance in the second quarter of 2025, with Statistics South Africa reporting a 0.8% expansion compared to the marginal 0.1% growth seen in the first quarter. The improvement was largely driven by increased output from the mining and manufacturing industries.
Eight out of 10 major industries recorded positive growth between April and June, showcasing broader economic resilience despite persistent structural challenges.
The mining sector posted a 3.7% increase, adding 0.2 percentage points to the overall gross domestic product (GDP). Key drivers included higher production in platinum group metals, gold, and chromium ore. Manufacturing also provided a significant lift, rising by 1.8% and contributing 0.2 percentage points to the GDP figure.
“Seven of the 10 manufacturing divisions reported positive growth rates. The largest positive contributions were reported for the petroleum, chemical products, rubber and plastic products division and the motor vehicles, parts and accessories, and other transport equipment division.”
Statistics South Africa
Meanwhile, the trade, catering, and accommodation industry advanced by 1.7%, making a 0.2 percentage point contribution to the GDP. Stronger activity in retail trade, motor trade, food and beverages, and accommodation all contributed to this rise.
The agriculture sector, which grew by 2.5%, added 0.1 percentage points to the economy. “This was primarily due to increased economic activities reported in horticulture and animal products,” the statistics agency explained.
Growth Offset By Transport And Construction Declines
However, not all sectors moved in the same direction. Transport, storage, and communication contracted by 0.8% as land transport and transport support services weakened. Similarly, construction activity slipped by 0.3%, further holding back growth momentum.
On the expenditure side, real GDP climbed by 0.7% in the second quarter, following a 0.2% increase in the first. This improvement was supported by household final consumption, government expenditure, and rising inventories.
Looking ahead, economists at Nedbank project a more robust performance for the remainder of 2025. “The main boost will come from domestic demand, supported by firmer consumer confidence, sustained by a recovery in real household incomes driven by lower inflation and debt service costs due to reduced interest rates,” the bank observed in a note.
Nonetheless, the bank cautioned that South Africa still faces significant headwinds.
“Despite ongoing structural reforms, operating conditions remain challenging and production costs high. Weaker global demand amid higher US tariff barriers will weigh on output, particularly given South Africa’s elevated cost structures, underlying inefficiencies, and significant infrastructure constraints.”
Nedbank
To address these challenges, Nedbank emphasized the importance of reform.
“Accelerating structural reforms are 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
Nedbank’s forecast places South Africa’s GDP growth at 1% for 2025, with average growth of 1.5% expected over the next three years.
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