The economy grew 0.4% in the fourth quarter of 2025 compared with 0.3% in the previous three months, propelled mainly by five industries that recorded positive growth, data from Statistics South Africa showed on Tuesday.
Growth for the whole year also quickened to 1.1% from 0.5% in 2024, although it undershot the Treasury’s estimate of 1.4%.
The finance industry was the largest positive contributor to the quarter’s growth number, increasing 1.4% and contributing 0.3 percentage points to the overall print, Stats SA said. The trade industry was up 0.9%, contributing 0.1 percentage point, while the personal services industry rose 0.4%.
The manufacturing industry was, however, the biggest drag, shrinking 0.6% and accounting for negative 0.1 percentage points to the overall number.
The annual GDP increase for 2025 was primarily led by higher economic activities in finance, real estate and business services, agriculture, forestry and fishing, as well as trade, catering and accommodation.
The manufacturing, electricity, gas and water, and construction industries all contracted.
The war in the Middle East is likely to undo most of the fairly optimistic 2026 growth forecasts for South Africa’s economy in 2026.
In his budget speech to parliament last month, finance minister Enoch Godongwana predicted the economy would grow 1.6% in 2026, while growth was expected to average 1.8% over the next three years and reach 2% by 2028.
The forecast, however, came before the turmoil triggered by the US and Israel’s attacks on Iran, sending global oil prices soaring.
In its annual results published earlier on Tuesday, banking group Absa warned prolonged military action in the Middle East could push energy prices higher and lead to weaker domestic GDP growth. Absa had forecast domestic growth of 1.9% before the latest conflict in the Middle East broke out.
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