Real GDP increased by 1.1% in 2025, following a 0.5% increase in 2024.
Statistics South Africa (Stats SA) revealed that the country’s gross domestic product (GDP) increased by 0.4% in the fourth quarter of 2025, following a 0.3% increase in the third quarter.
Real GDP increased by 1.1% in 2025, following a 0.5% increase in 2024.
The finance, real estate and business services industry contributed significantly to the growth, followed by the trade, catering and accommodation industry. Household spending also contributed significantly to the growth.
Analysts remain concerned that manufacturing is still struggling, as the industry decreased by 0.6% for the period.
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Growth worth celebrating
Professor Waldo Krugell, an economist at the Faculty of Economic and Management Sciences at North-West University (NWU), on Tuesday told The Citizen that the growth, no matter how small, is something worth being excited about.
“This is South Africa, so we have to be excited about decimal figures of growth,” he said. “The drivers of growth are as expected, with some growth from agriculture, which is really positive for that fourth quarter.”
According to Stats SA, the agriculture, forestry and fishing industry increased by 0.4% during the quarter, driven by economic activity in field crops and horticultural products.
Largest contributors to GDP growth
Data revealed that the finance, real estate, and business services industry increased by 1.4%, contributing 0.3 percentage points.
“Increased economic activities were reported for other business services; financial intermediation, insurance and pension funding; auxiliary activities; and real estate activities,” said Stats SA.
“The trade, catering and accommodation industry increased by 0.9%, contributing 0.1 of a percentage point. Increased economic activities were reported for wholesale trade, motor trade, retail trade, food and beverages and accommodation.”
General government services increased by 0.4%. This was mainly due to increased employment in provincial and local government.
Concerns around manufacturing
The manufacturing industry remains a thorn in the economy’s side. Stats SA said eight of the 10 manufacturing divisions reported negative growth rates.
The largest negative contributions were reported for the motor vehicles, parts and accessories and other transport equipment; wood and wood products, paper, publishing and printing; and food and beverages divisions.
“The worrying part is the contraction in manufacturing,” said Krugell. “We saw that in manufacturing output month after month; we see it in the PMIs and in the Business Confidence Indices. The manufacturing sector is struggling.”
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Household spending delivers
Spending in the economy (by households, businesses, and government) increased by 0.3% in the last three months of 2025, after growing by 0.4% in the previous quarter.
Krugell acknowledged household spending to be the big driver of economic growth.
Stats SA revealed that household spending increased by 1.2%, contributing 0.8 percentage points to overall GDP growth. Most money was spent on durable goods, semi-durable goods, non-durable goods, and services.
The negative contributor was expenditure on alcoholic beverages, tobacco and narcotics.
Final consumption spending by general government increased by 0.5%, contributing 0.1 of a percentage point to the total growth. This was mainly driven by increases in purchases of goods and services and compensation of employees.
Exports and imports
Stats SA’s data showed that the country exported fewer goods and services, with exports decreasing by 0.6%, which reduced GDP growth by 0.3 percentage points.
The decrease was mainly due to the country selling fewer vehicles and transport equipment, as well as vegetable products, food, beverages, and tobacco to other countries.
Imports of goods and services increased by 0.5%, largely due to higher trade in machinery and electrical equipment, vehicles, and transport equipment.
Krugell said the results from exports and imports are not surprising, as they were expected.
Gross fixed capital formation
He added that something that will get the commentators excited is positive growth in gross fixed capital formation in the fourth quarter, which increased by 1.3% and contributed 0.2% to that quarter’s total growth.
“I think it is really an indicator of growth potential in the year to come, but obviously influenced by recent events,” said Krugell.
“If the supply side experiences a cost shock, it translates into less investment down the line. The annual numbers, though, investment was still down by 2.2%, which is a major concern for the long-run growth potential of the economy. Overall, I think these are numbers to be positive about.”
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Annual GDP
Stats SA said Real GDP increased by 1.1% in 2025, following a 0.5% increase in 2024. Many analysts forecast an increase around this amount.
The growth was led by higher economic activities in finance, real estate and business services (1.9% and contributing 0.5 of a percentage point), agriculture, forestry and fishing (17.4% and contributing 0.4 of a percentage point) and trade, catering and accommodation (2.3% and contributing 0.3 of a percentage point).
The manufacturing, electricity, gas and water, and construction industries recorded negative growth in 2025.
Looking ahead
Krugell said there’s positivity in the country’s economic outlook. “There’s evidence of some green shoots for economic growth, but how this carries forward into 2026 will, to a large extent, depend on what’s happening in the Gulf and what will happen with the oil price going forward,” he said.
“How much of that will end up as an inflationary shock in South Africa in the end, probably leading to high-interest rates, which we don’t want.”
Johann Els, chief economist at PSG Financial Services, said that global developments pose an important risk to the country’s positive outlook.
“The conflict in the Middle East has already pushed global oil prices higher,” he said.
“At current levels, it appears possible that the petrol price in South Africa could rise by as much as R4 per litre in April.
“This would push CPI inflation temporarily towards around 4%, compared with my previous estimate of roughly 3.4% for that month. As a result, average inflation for 2026 could rise from around 3.2% to closer to 3.7%.”
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