South African economy expands for fifth quarter, global risks emerge

South Africa's real gross domestic product (GDP) expanded by 0.4 percent in the fourth quarter of 2025, marking a fifth consecutive quarter of growth.

Annual output growth more than doubled to 1.1 percent in 2025, supported by the primary and tertiary sectors.

However, activity contracted in the primary and secondary sectors during Q4. Mining output decreased due to persistent logistical constraints and lower production of coal and platinum group metals, while agricultural output growth slowed despite La Niña-related rainfall.

The secondary sector saw contractions across all subsectors, with manufacturing constrained by deindustrialisation, weak investment, and rising energy costs.

The construction sector recorded its ninth successive year of contraction in 2025.

Real gross domestic expenditure (GDE) growth moderated slightly to 0.7 percent in the fourth quarter, with household consumption being the main contributor to annual GDP growth.

Growth in real final consumption expenditure by households accelerated to 1.2 percent in the fourth quarter of 2025, supported by rising real disposable income and improved consumer confidence.

Household debt increased, with the debt-to-nominal disposable income ratio rising to 61.8 percent in Q4 2025, though the cost of servicing debt eased to 8.4 percent.

Households' net wealth also rose, primarily due to a marked increase in share prices.

The FTSE/JSE All-Share Index (Alsi) surged by 37.7 percent in 2025, its best performance since 2005, significantly outperforming global peers with a 55.3 percent rise in US dollar terms.

This buoyant market performance was abruptly interrupted by the outbreak of the Middle East war on 28 February 2026, leading to a surge in Brent crude oil prices, rand depreciation, falling share prices, and increased bond yields.