South Africa’s (SA’s) economy delivered a softer performance in the third quarter, with Q3-2025 gross domestic product (GDP) growth slowing to 0.5% quarter-on-quarter, down from 0.9% in the previous quarter. While the moderation is notable, the annual growth rate has risen to 2.1%, signalling gradual improvement and offering cautious optimism.
“In today’s GDP print, it is encouraging to see the progress toward more meaningful growth levels. If policy reform continues and fixed capital investment gains momentum, we could lift growth sustainably above the current levels,” says Maarten Ackerman, Chief Economist at Citadel.
Figure 1: Source: Stats SA GDP figures for Q3 2025
Broad-based industry growth signals momentum
Despite the softer headline number, industry performance was broadly constructive. Almost all major sectors contributed positively, including mining and construction, both of which have faced pressure in recent quarters.
“Mining delivered a strong contribution on the back of current commodity dynamics and equally encouraging is the return of construction to positive territory after multiple negative quarters,” Ackerman explains.
The only sector to contract this quarter was electricity, gas and water, reflecting declines in energy generation.
Figure 2: Source: Stats SA GDP figures for Q3 2025
Consumers remain resilient
Household consumption grew by 0.7%, slightly below the second quarter but still positive, despite elevated interest rates and a strained labour market. Ackerman notes that “consumers continue to keep their heads above water, highlighting resilience in the face of ongoing economic pressure.”
Investment activity shows a turning point
One of the strongest signals in the data is the improvement in gross fixed capital formation, which increased by 1.6% after three consecutive quarters of contraction.
“This is possibly the most positive takeaway from the third quarter; it may signal that private sector investment is beginning to return and that structural reform is taking hold,” says Ackerman.
With SA’s investment ratio at 14% of GDP, compared to 24% a decade ago, sustained improvement in this area remains essential for long-term economic progress.
Figure 3: Stats SA GDP figures for Q3 2025
Supportive tailwinds are emerging
Several developments continue to support momentum in the recovery. Strong commodity prices, a fiscally disciplined budget, removal from the Financial Action Task Force (FATF) grey list, an improved credit ratings outlook and inflation contained within the new 3% target all contribute positively. These factors create room for the South African Reserve Bank (SARB) to potentially lower interest rates further, offering relief to consumers and supporting economic growth.
Looking ahead
While the quarter was softer, Ackerman highlights that the broader trajectory is what matters.
“Growth above 2% is encouraging, but sustainable improvement will require continued policy reform and greater private sector participation. If the investment trend continues and reform gains momentum, we may finally be turning the corner,” Ackerman concludes.