Key Indicators Show South Africa’s GDP Growth for the Third Straight Quarter

South Africa’s economic growth is poised to continue for a third consecutive quarter, buoyed by recoveries in essential manufacturing and mining sectors, though US tariffs introduce new challenges to growth.

Analysts polled by Bloomberg from August 8-13 predict a 0.4% growth in the second quarter’s gross domestic product, set to be announced on September 9, an increase from 0.1% observed in the previous quarter.

The rebound in manufacturing and mining is expected to have positively impacted the economy.

“I expect a somewhat improved performance in the second quarter,” stated Johan Els, chief economist at Old Mutual Ltd., expressing more optimism than most analysts, who forecast a growth of 0.8%. “Analyzing the various sectors — after severe downturns in mining, manufacturing, and utilities — all have reported significant improvements.”

Frank Blackmore, lead economist at KPMG in South Africa, pointed out that the mining sector has seen gains from demand-driven price increases.

“We have recently noted rises in platinum and palladium prices,” which may be driven by international clients “buying in advance, prompted by tariff worries,” Blackmore remarked.

On August 7, US President Donald Trump imposed varying tariffs on exports from trading partners, disrupting supply chains and posing a threat to global economic growth. South Africa faces a 30% tax, among the highest in the world, which is likely to affect the automotive and agricultural industries and risk up to 30,000 jobs, as indicated by the country’s trade department.

These tariffs could impede sustainable growth in the latter half of the year and have detrimental effects on employment, as noted by Jee-A Van Der Linde, senior economist at Oxford Economics.

“The impact is expected to become more evident in the third and fourth quarters,” Van Der Linde explained. “It’s quite likely that job prospects could remain strained as businesses adjust to this new trade environment.”

South Africa’s unemployment rate reached 33.2% in the second quarter, marking a yearly high.

“In light of this, I do not foresee businesses ramping up production, expanding operations, or adding new staff; the current landscape simply does not allow for it,” Van Der Linde commented.

While consumer spending is expected to be vital for growth in the remainder of the year, diminishing optimism due to trade issues and rising utility costs may curb household spending.

“Consumers are facing pressure, especially with the recent electricity price hikes and uncertain conditions,” Blackmore highlighted.

Moderate inflation and recent cuts in interest rates have led to a 0.9% growth in retail sales, a segment of the trade sector, bouncing back from a 0.4% decline in the preceding quarter.

South African inflation has remained near the lower end of the central bank’s 3% to 6% target range for nine months in a row, allowing policymakers to lower interest rates by a total of 75 basis points to 7% in 2025, with further cuts possible later this year.

© 2025 Bloomberg

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