Economic growth in South Africa slowed in the first quarter of 2025 as real gross domestic product (GDP) increased marginally by 0.1% following a revised increase of 0.4% in the fourth quarter of 2024. The real gross value added (GVA) by both the primary and tertiary sectors expanded, while that by the secondary sector contracted further.

The output of the primary sector increased further in the first quarter of 2025 as the real GVA by the agricultural sector expanded significantly for a second successive quarter, while mining production contracted further. Agricultural output was boosted by the increased production of horticultural and animal products, assisted by the good rainfall during the quarter. Mining output contracted further in the first quarter of 2025 as production volumes declined in 8 of the 12 mineral groups, particularly in platinum group metals (PGMs), coal, chromium ore, building materials and gold. Production was weighed down by flooding-induced stoppages at a large platinum mine, ongoing logistical constraints and, except for gold, generally low commodity prices.

Real economic activity in the secondary sector contracted at a faster pace in the first quarter of 2025 as output decreased further in all three industries of the secondary sector. The decrease in manufacturing production was broad-based as activity continued to be impeded by weak domestic demand, high operating costs, infrastructure constraints as well as logistical inefficiencies. The volume of both electricity produced and consumed as well as water consumption decreased in the first quarter of 2025. In addition to subdued demand from the electricity-intensive mining and manufacturing sectors, electricity generation was constrained by breakdowns at several of Eskom’s generation units, resulting in the renewed implementation of electricity load-shedding. The contraction in the real output of the construction sector reflected lower civil construction and residential building activity.

The real GVA by the tertiary sector increased at a slightly faster pace in the first quarter of 2025. The output of the commerce sector increased further, albeit at a much slower pace, as economic activity increased in the retail and motor trade as well as tourism and accommodation subsectors, while wholesale trade activity decreased. The expansion in the transport, storage and communication services sector was underpinned by increased activity in land freight and air transport as well as transport support services. The output of the finance, real estate and business services sector expanded marginally in the first quarter of 2025 as activity increased in the insurance, pension fund and financial auxiliary services subsectors. By contrast, the output of the general government services and personal services sectors contracted further.

Growth in real gross domestic expenditure (GDE) accelerated to 0.4% in the first quarter of 2025 following an increase of 0.2% in the fourth quarter of 2024. Real final consumption expenditure by households increased at a slower pace in the first quarter of 2025 but nevertheless contributed most to growth in real GDP. By contrast, real final consumption expenditure by general government and gross fixed capital formation contracted further, alongside a further deaccumulation of real inventory holdings, albeit at a slower pace.

Growth in real final consumption expenditure by households moderated notably in the first quarter of 2025, along with the slower pace of increase in the real disposable income of households and a sharp decline in consumer confidence. Real spending on durable and non-durable goods increased at a slower pace, while that on semi-durable goods remained unchanged and growth in real outlays on services accelerated.

Household debt as a percentage of nominal disposable income increased from 62.2% in the fourth quarter of 2024 to 62.7% in the first quarter of 2025 as household debt increased more than nominal disposable income. Households’ cost of servicing debt relative to disposable income edged slightly lower over the same period, reflecting lower interest payments following the further 25 basis point reduction in the prime lending rate in January 2025.

Households’ net wealth increased in the first quarter of 2025 as the market value of total assets increased more than that of total liabilities. The value of assets was boosted by a notable increase in domestic share prices as the FTSE/JSE All-Share Index outperformed share price indices in developed markets in the first quarter of 2025, while the value of housing stock also increased further.

Real gross fixed capital formation decreased by a further 1.7% in the first quarter of 2025, driven by reduced capital spending by private business enterprises, while capital outlays by public corporations and general government increased. Measured by asset type, real capital investment in residential buildings, transport equipment, construction work as well as machinery and equipment decreased in the first quarter of 2025.

In line with the sluggish growth in real economic activity, total household-surveyed employment decreased in the first quarter of 2025. Formal sector employment decreased significantly, with notably fewer people also employed by private households. Conversely, employment in the informal and agricultural sectors increased slightly. Year-on-year growth in employment slowed sharply to only 0.3% in the first quarter of 2025, significantly slower than the 3.4% recorded in the first quarter of 2024.

South Africa’s official unemployment rate increased from 31.9% in the fourth quarter of 2024 to 32.9% in the first quarter of 2025 as the total number of officially unemployed people increased significantly to 8.2 million and the number of employed people decreased. The youth unemployment rate has been elevated for a protracted period and increased notably in the first quarter of 2025.

Wage growth moderated further in the fourth quarter of 2024 as the year-on-year pace of increase in formal non-agricultural nominal remuneration per worker slowed to 4.5%. Despite the moderation in nominal remuneration growth, real wages per worker increased year on year for a fourth successive quarter as inflation slowed more than wage growth over this period.

After three consecutive quarters of acceleration, growth in labour productivity in the formal non-agricultural sector slowed notably in the fourth quarter of 2024. However, on an annual basis, the change in labour productivity reverted from a slight decrease in 2023 to an increase in 2024 as formal non-agricultural employment decreased alongside moderate output growth.

Growth in nominal unit labour cost in the formal non-agricultural sector accelerated somewhat in the fourth quarter of 2024 but remained fairly subdued. Annual average growth in nominal unit labour cost moderated notably to 3.1% in 2024 as growth in total formal non-agricultural remuneration slowed sharply.

Global inflationary pressures have eased further thus far in 2025, supported by a sustained period of low international fuel prices, with the impact of a range of new trade tariffs announced by the United States (US) and countermeasures announced by some of its trading partners not yet visible in consumer price indices.

Similarly, domestic inflationary pressures have remained broadly contained, with both headline consumer and producer price inflation slowing in recent months due to lower fuel prices and subdued economic activity. Headline consumer price inflation moderated to below the lower limit of the inflation target range and amounted to 2.7% in March 2025 – the lowest rate since June 2020 – before edging up slightly in April. The slowdown in consumer goods price inflation was largely driven by the sharp decrease in fuel prices, reflecting the decline in the average price of Brent crude oil from US$79.39 per barrel in January 2025 to US$64.39 per barrel in May – its lowest level since April 2021 – primarily due to growing concerns of a global economic slowdown amid heightened uncertainly over international trade tariffs. Consumer services price inflation also slowed steadily over this period and aided the gradual slowdown in core inflation to 3.0% in April and May 2025, reflecting generally weak domestic economic activity and muted demand-driven inflationary pressures.

South Africa’s trade surplus narrowed slightly in the first quarter of 2025 as the value of merchandise imports increased more than that of merchandise and net gold exports. The value of net gold exports decreased in the first quarter of 2025 as the physical quantity of gold exported decreased from a high base and outweighed the higher realised price of net gold exports. The average US dollar price of gold on the London market increased sharply thus far in 2025 and posted a new record high monthly average of US$3 284 per fine ounce in May, amid heightened global economic uncertainty following the announcement of new US trade tariffs in April, ongoing geopolitical tensions, a weaker US dollar and sustained demand for gold by central banks. South Africa’s terms of trade improved further in the first quarter of 2025 as the rand price of exported goods and services increased more than that of imports.

The higher value of merchandise exports in the first quarter of 2025 reflected increased mining, manufacturing and agricultural exports. Mining exports were boosted by increased exports of mineral products and pearls, precious and semi-precious stones, which more than offset the reduced exports of PGMs as well as base metals and articles thereof. The increase in manufacturing exports was primarily driven by vehicles and transport equipment; machinery and electrical equipment; as well as prepared foodstuffs, beverages and tobacco, which outweighed the lower export value of wood pulp and paper-related products as well as artificial resins and plastics. Higher exports of fruit, especially grapes, supported a third consecutive quarterly increase in the value of agricultural exports.

The increase in the value of merchandise imports in the first quarter of 2025 resulted from increased manufacturing imports, while agricultural and mining imports decreased. The higher import value of manufactured products mainly reflected increased imports of machinery and electrical equipment, chemical products as well as vehicles and transport equipment. The value of mining imports was weighed down by reduced imports of base metals and articles thereof, especially iron and steel as well as copper wire and pearls, precious and semi-precious stones.

The shortfall on the services, income and current transfer account narrowed in the first quarter of 2025 as the smaller deficits on the services and income accounts outweighed the larger deficit on the current transfer account. The narrower income deficit resulted mainly from an increase in gross dividend receipts and a notable decrease in gross dividend payments. The deficit on the services, income and current transfer account decreased more than the trade surplus, resulting in a slight narrowing of the deficit on the current account of the balance of payments in the first quarter of 2025. As a ratio of GDP, the current account deficit remained broadly unchanged at 0.5%.

The net flow of capital on South Africa’s financial account of the balance of payments (excluding unrecorded transactions) switched from a small outflow in the fourth quarter of 2024 to an inflow of R36.9 billion in the first quarter of 2025. On a net basis, direct investment, other investment and reserve assets recorded inflows, while portfolio investment and financial derivatives recorded outflows.

South Africa’s total external debt decreased from US$176.3 billion at the end of September 2024 to US$168.4 billion at the end of December as the rand-denominated external debt decreased significantly. However, expressed in rand terms, South Africa’s total external debt increased as the exchange value of the rand depreciated by 8.5% against the US dollar, on balance, in the fourth quarter of 2024.

South Africa’s positive net international investment position (IIP) increased from the end of September 2024 to the end of December as the market value of foreign assets increased more than that of foreign liabilities. The depreciation in the exchange value of the rand, as reflected by the 3.5% decrease in the nominal effective exchange rate (NEER) in the fourth quarter of 2024, had a larger impact on foreign assets than on foreign liabilities over this period.

The NEER increased slightly in the first quarter of 2025, largely due to a weaker US dollar following changing inflation expectations in the US and growing concerns about the strength of that economy, amid uncertainty around its foreign trade policies. However, the exchange value of the rand was weighed down by escalating geopolitical tensions and political uncertainty in South Africa following Parliament’s initial rejection of the 2025 National Budget, which partially offset some of the benefits of the weaker US dollar. After decreasing in April 2025, the NEER increased again in May as progress was made with tariff negotiations between South Africa and the US, the revised 2025 National Budget was re-tabled in Parliament and news that an announcement on South Africa’s inflation targeting regime may be imminent.

Growth in the broadly defined money supply (M3) decelerated from 7.8% in November 2024 to 5.7% in March 2025, before accelerating slightly in April. The slowdown resulted from a moderation in the deposit growth of companies, while that of the household sector remained steady.

Growth in total loans and advances extended to the domestic private sector by monetary institutions remained sluggish for most of 2024 and in the first quarter of 2025, despite the reduction in lending rates since September 2024. This reflected a slowdown in the pace of increase in loans extended to households, while that to companies bottomed out. Growth in mortgage advances – the largest credit category – remained muted during 2024 but edged up slightly from July 2024 to April 2025, driven by faster growth in mortgage advances on commercial property, which reflected an overall improvement in commercial property activity. By contrast, growth in mortgage advances on residential and farm properties remained subdued over this period.

The yield on 10-year South African rand-denominated government bonds increased notably from the end of January 2025 to a recent high of 10.99% on 7 April, reflecting the depreciation in the exchange value of the rand, disputes within the government of national unity (GNU) over the impasse in passing the 2025 National Budget and the possible impact of ongoing trade tensions on global economic growth and inflation. However, the yield then decreased again to 10.13% on 13 June, along with the appreciation in the exchange value of the rand, lower-than-expected domestic consumer price inflation and the withdrawal of the initially proposed value-added tax (VAT) increase in the 2025 National Budget.

The total nominal value of outstanding listed and unlisted rand-denominated debt securities issued by residents and non-residents in the domestic primary debt market increased to R7.3 trillion at the end of April 2025. The increase resulted from net issuance by the general government, which lifted its contribution to the total amount of debt securities in issue to 70%. By contrast, corporations recorded net redemptions in the first four months of 2025 as banks, the largest contributor, reduced their outstanding amount of unlisted debt securities in issue amid reduced funding requirements.

The preliminary non-financial public sector borrowing requirement decreased by R24.9 billion to R251.5 billion in fiscal 2024/25. This largely reflected a substantial decline in the deficit of the non-financial public enterprises and corporations as well as extra-budgetary institutions switching from a deficit to a surplus.

National government’s preliminary cash book deficit was R13.8 billion higher in fiscal 2024/25 than in the previous fiscal year as total expenditure increased by more than total revenue. However, national government realised a slightly larger primary surplus in fiscal 2024/25 as growth in total revenue outpaced that in non-interest expenditure. The net borrowing requirement decreased somewhat to R279.7 billion in fiscal 2024/25 and was primarily financed through the net issuance of domestic government bonds, followed by Treasury bills (TBs) and short-term loans as well as foreign bonds and loans. As a result, national government’s gross loan debt increased by 8.3% year on year to R5 694 billion (76.9% of GDP) as at 31 March 2025.