South Africa’s economy stagnated in the first quarter, recording quarterly growth of just 0.1%, as contractions in sectors such as mining and manufacturing offset the strong performance in agriculture.
As reported by Marketscreener, Africa’s largest economy has struggled to gain momentum since the 2008–09 global financial crisis, with average annual growth below 1% over the past decade. Business and consumer confidence has risen since the formation of a coalition government last year, but this has yet to translate into higher production levels.
Data released this Tuesday (3 June) was slightly better than expected, as economists polled by Reuters had forecast no change in GDP from the previous quarter, seasonally adjusted. Statistician Risenga Maluleke highlighted the weak growth as a concern: “Our economy is not growing fast enough, and in this state, it is easy for it to slip into negative territory.”
The agricultural sector grew by more than 15% in the first quarter, making the largest contribution to growth. However, mining contracted by 4%, and manufacturing by 2%.
The National Statistics Agency revised down its fourth-quarter growth estimate to 0.4%, from an initial estimate of 0.6%.
Capital Economics noted in a research memo that the data showed the country’s economic recovery was losing momentum, strengthening the case for further interest rate cuts by the South African Reserve Bank (SARB).
The South African coalition government is trying to increase the growth rate through reforms, but longstanding problems—such as logistical bottlenecks at ports and in the freight rail network—are being addressed only slowly.
Year-on-year, first-quarter GDP rose by 0.8%, compared with a forecast of 0.7%. Last week, the central bank revised down its 2025 growth forecast from 1.7% to 1.2%.
Source: Diário Económico
