Economic activity in South Africa expanded at a faster pace in the second quarter of 2025 as growth in real gross domestic product (GDP) accelerated to 0.8% from 0.1% in the first quarter. The expansion was broad-based as the output of the primary, secondary and tertiary sectors increased.

The real gross value added (GVA) by the primary sector expanded further in the second quarter of 2025 as the output of both the agricultural and the mining sectors increased. The continued expansion in agricultural output was primarily due to the higher production of horticultural and animal products, reflecting favourable weather conditions. The rebound in mining output after two successive quarters of contraction resulted from increased production volumes in 9 of the 12 mineral groups, notably platinum group metals (PGMs) following flooding-related disruptions in the previous quarter, while gold production was supported by the higher gold price and operational enhancements at certain large mines, and coal production was boosted by improved logistics and domestic demand.

Real economic activity in the secondary sector expanded in the second quarter of 2025 following two consecutive quarters of contraction. The expansion was underpinned by increased activity in the manufacturing as well as electricity, gas and water supply sectors, while the real output of the construction sector decreased further. Production volumes increased in 7 of the 10 manufacturing subsectors in the second quarter of 2025 as both durable and non-durable manufacturing production increased, indicating some improvement in domestic demand over this period. The higher volume of both electricity production and electricity consumption reflected increased generation by Eskom and independent power producers as well as an overall improvement in grid reliability. By contrast, the further contraction in the construction sector reflected a decrease in residential and non-residential building activity.

The real output of the tertiary sector increased at a slightly faster pace in the second quarter of 2025. Economic activity expanded in the commerce sector as the real output of the retail and motor trade as well as tourist accommodation subsectors increased, likely supported by subdued consumer price inflation and the successive interest rate reductions, while activity in the wholesale trade subsector decreased further. The output of the transport, storage and communication services sector contracted following an expansion in the first quarter, due to reduced activity in land freight transportation, fewer passenger journeys undertaken by road and diminished transport support services. The expansion in the output of the finance, real estate and business services sector reflected increased activity in the monetary intermediation, insurance, real estate and financial auxiliary services subsectors. The real GVA by the general government and personal services sectors also expanded in the second quarter of 2025 following contractions in the preceding quarter.

Growth in real gross domestic expenditure accelerated to 1.1% in the second quarter of 2025 following an increase of 0.4% in the first quarter. Real final consumption expenditure by households and general government increased in the second quarter of 2025, along with an accumulation of real inventory holdings. By contrast, real gross fixed capital formation contracted further.

Real final consumption expenditure by households increased at a faster pace in the second quarter of 2025, in line with the continued increase in the real disposable income of households.

Real spending on durable and semi-durable goods as well as services increased, while spending on non-durable goods decreased further.

Household debt as a percentage of nominal disposable income decreased slightly to 62.4% in the second quarter of 2025 from 62.7% in the first quarter, as households’ disposable income increased at a faster pace than their debt. Households’ cost of servicing debt as a percentage of disposable income edged lower to 8.8% in the second quarter of 2025 from 8.9% in the first quarter, reflecting a slower pace of increase in the stock of debt and a further 25 basis points decrease in the prime lending rate in May 2025.

Real gross fixed capital formation decreased for a third successive quarter in the second quarter of 2025 due to reduced capital investment by public corporations and general government. By contrast, the higher fixed investment spending by private business enterprises mostly reflected increased investment in machinery and other equipment.

Despite the acceleration in output growth, total household-surveyed employment increased only marginally in the second quarter of 2025 as formal sector and private household employment increased while the number of people employed in the informal and agricultural sectors decreased. Employment contracts of a limited duration increased in the year to the second quarter of 2025, likely reflecting temporary employment opportunities related to Phase V of the Presidential Youth Employment Initiative that commenced in June. Conversely, employment contracts of an unspecified duration and a permanent nature decreased over the same period.

South Africa’s official unemployment rate increased further from 32.9% in the first quarter of 2025 to 33.2% in the second quarter as the number of officially unemployed people increased much more than the number of employed people. The youth unemployment rate (persons aged 15–24 years and actively searching for work) remained elevated but decreased slightly to 62.2% in the second quarter of 2025. Persons with an education level of Matric/Grade 12 or less continued to experience high unemployment rates, while the graduate unemployment rate increased further to 12.2% in the second quarter of 2025.

Growth in formal non-agricultural nominal remuneration per worker slowed for a third successive quarter to 4.1% in the first quarter of 2025, largely due to a moderation in private sector wage growth. However, real wage growth per worker accelerated to 1.6% in the first quarter of 2025, reflecting the moderation in consumer price inflation.

Growth in labour productivity in the formal non-agricultural sector decelerated marginally to 1.1% in the first quarter of 2025. Similarly, growth in nominal unit labour cost in the formal non-agricultural sector moderated slightly to 3.0% over the same period. Likewise, growth in economy-wide nominal unit labour cost decelerated further to 2.8% in the second quarter of 2025.

Although global inflation moderated further in the first half of 2025, ongoing geopolitical tensions, United States (US) trade policy uncertainty and recurring supply-chain disruptions continue to pose upside risks. In South Africa, inflationary pressures have increased somewhat, with both consumer and producer price inflation edging higher in recent months from fairly subdued rates. Headline consumer price inflation quickened from 2.7% in March 2025 to 3.5% in July before slowing somewhat to 3.3% in August, with the acceleration resulting largely from higher food prices and a slower rate of decline in fuel prices. The acceleration in food price inflation was driven by higher vegetable prices and a marked increase in meat prices, in particular beef, reflecting the impact of the foot-and-mouth disease outbreak.

The significant increase in water tariffs in July 2025 was the main driver of higher administered price inflation. Nevertheless, core inflation accelerated only marginally to 3.1% in August 2025, reflecting muted underlying inflationary pressures.

South Africa’s trade surplus narrowed further in the second quarter of 2025 as the value of goods exports decreased more than that of merchandise imports. The value of net gold exports increased slightly in the second quarter of 2025 as the strong increase in the average realised rand price thereof outweighed the lower physical quantity of gold exported. The average US dollar price of gold on the London market increased further in the second quarter of 2025 and reached a new record monthly average high of US$3 359 per fine ounce in

August amid an escalation in geopolitical tensions, a weaker US dollar and continued gold purchases by central banks.

The decrease in the value of merchandise exports in the second quarter of 2025 resulted from reduced mining and agricultural exports, while manufacturing exports increased. The decrease in agricultural exports mainly reflected the lower export value of vegetable products as maize exports to Zimbabwe in particular decreased significantly. Mining exports were weighed down by lower export values of base metals and articles thereof as well as pearls, precious and semi-precious stones, which outweighed the increased exports of mineral products and PGMs. The value of manufacturing exports increased for a third consecutive quarter in the second quarter of 2025, mainly reflecting higher exports of paper and paper products; vehicles and transport equipment; textiles and articles thereof; prepared foodstuffs, beverages and tobacco; as well as resins, plastics and articles thereof.

Following two consecutive quarterly increases, the value of merchandise imports decreased marginally in the second quarter of 2025 as the lower import value of agricultural and mining products outweighed the higher import value of manufactured products. The decrease in the value of agricultural products could largely be attributed to the reduced imports of maize and soya beans. The value of mining imports decreased further in the second quarter of 2025 as the lower import value of mineral products outweighed the higher imports of pearls, precious and semi-precious stones as well as base metals and articles thereof. The lower value of mineral products reflected reduced imports of refined petroleum products, while the value of crude oil imports increased. The increase in the value of manufacturing imports resulted primarily from higher imports of vehicles and transport equipment as well as prepared foodstuffs, beverages and tobacco. The value of imported vehicles and transport equipment increased significantly due to higher imports of passenger vehicles, vehicle components and several aircraft, with passenger car imports boosted by the rapid growth in the demand for Chinese vehicles.

The shortfall on the services, income and current transfer account widened slightly from the first to the second quarter of 2025 due to the wider deficit on the income account which outweighed the smaller deficits on the services and current transfer accounts. The larger income deficit resulted from gross income payments increasing at a much faster pace than gross income receipts, as gross dividend payments increased notably. The smaller trade surplus and the slightly larger deficit on the services, income and current transfer account resulted in a further widening of the deficit on the current account of the balance of payments to 1.1% of GDP in the second quarter of 2025.

The net flow of capital on South Africa’s financial account of the balance of payments (excluding unrecorded transactions) switched from an inflow of R36.9 billion in the first quarter of 2025 to a small outflow of R0.4 billion in the second quarter. On a net basis, portfolio investment, financial derivatives and reserve assets recorded inflows, while direct investment and other investment recorded outflows.

South Africa’s total external debt increased from US$168.4 billion at the end of December 2024 to US$173.1 billion at the end of March 2025 as the rand-denominated external debt increased while the foreign currency-denominated external debt decreased slightly.

South Africa’s positive net international investment position increased further from the end of December 2024 to the end of March 2025 as the market value of foreign assets increased more than that of foreign liabilities. The increase in foreign assets could mainly be attributed to an increase in direct and portfolio investment assets as the market value of dual-listed entities with foreign headquarters increased.

The nominal effective exchange rate (NEER) of the rand decreased in the second quarter of 2025 following a marginal increase in the first quarter. The decrease occurred amid heightened financial market volatility resulting from escalating geopolitical tensions and frequent shifts in US foreign trade policies, while renewed domestic political uncertainty related to the functioning of the government of national unity weighed on the rand in June 2025. The NEER subsequently increased again along with other commodity-backed currencies, supported by higher international commodity prices.

Growth in the broadly defined money supply (M3) moderated to 5.8% in March 2025 before accelerating to 6.7% in July. The acceleration reflected faster growth in the deposit balances of companies, while growth in household sector deposits remained steady. Despite the recent acceleration in year-on-year growth, the quarter-to-quarter seasonally adjusted and annualised growth in M3 slowed further to 3.7% in the second quarter of 2025.

Growth in total loans and advances extended by monetary institutions to the domestic private sector accelerated from a recent low of 3.9% in February 2025 to 6.5% in July, reflecting a broad-based acceleration in credit growth to companies. By contrast, growth in loans and advances extended to households has remained subdued thus far in 2025, indicative of continued caution among both banks and consumers.

The yield on 10-year South African rand-denominated government bonds decreased notably from a recent high of 10.99% on 7 April 2025 to 9.36% on 12 September. The decline reflected, among other factors, the appreciation in the exchange value of the rand, lower domestic interest rates, subdued domestic consumer price inflation and signals from the South African Reserve Bank indicating a preference for inflation to settle at the lower bound of the target range. Furthermore, the conclusion of trade agreements between the US and some major trading partners reignited investor optimism and contributed to lower domestic bond yields, as these agreements are expected to help moderate tariff-induced global inflation. Over the same period, movements in the level of the yield curve also reflected the impact of the underlying drivers of bond yields as it moved lower across the maturity spectrum and the slope flattened as long-term rates declined more than short-term rates.

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 by 7.3% year on year to R7.5 trillion at the end of July 2025. Although the net issuance of debt securities by general government still dominated overall issuance activity in the first seven months of 2025, it was significantly lower compared with the same period of 2024, mainly reflecting the redemption of an inflation-linked bond. Corporates recorded subdued net issuance over the same period as banks continued to record net redemptions of unlisted debt securities, reflecting reduced funding needs amid the subdued uptake of credit by households despite a relatively favourable lending environment.

The preliminary non-financial public sector borrowing requirement decreased by R7.8 billion year on year to R36.4 billion in the first quarter of fiscal 2025/26 (April–June 2025). This reflected a notably smaller cash deficit of the non-financial public enterprises and corporations as well as a marginally smaller deficit of the consolidated general government. Within the consolidated general government, national government switched from a cash deficit to a surplus as higher tax revenue collections outweighed the muted growth in total expenditure. Conversely, extrabudgetary institutions switched from a cash surplus to a deficit due to higher cash payments for operating activities, particularly transfers to households.

National government’s cash book deficit of R26.0 billion in the first quarter of fiscal 2025/26 was nearly half of the deficit recorded during the same period of fiscal 2024/25 as total revenue increased by much more than expenditure. Revenue was boosted by notable increases in personal income tax and net value-added tax collections. As a result, national government achieved a primary surplus of R19.7 billion in the first quarter of fiscal 2025/26 compared with a primary deficit of R8.4 billion recorded in the corresponding period of the previous fiscal year, with the net borrowing requirement decreasing substantially from R55.5 billion to R2.9 billion over the same period. Nevertheless, national government’s gross loan debt increased by 8.5% year on year to R5 817 billion (78.1% of GDP) as at 30 June 2025.