South Africa’s economy has experienced its fastest growth in two years during the second quarter, primarily due to a significant rebound in manufacturing and mining sectors. Gross domestic product (GDP) grew by 0.8% in the three months ending in June, a notable increase from the previous quarter’s growth of 0.1%. This performance exceeded the median estimate of 0.6% predicted by 13 economists in a Bloomberg survey.
Statistics South Africa reported that eight out of ten sectors showed expansion during this period. The manufacturing, mining, and trade sectors were the leading contributors to this growth. Mining output surged by 3.7%, reaching its highest growth rate since the first quarter of 2021, with platinum group metals, gold, and chromium ore identified as key drivers.
The trade, catering, and accommodation sector also recorded a positive increase of 1.7%, marking its best performance since early 2022. On the expenditure side, stronger household consumption, which has risen for five consecutive quarters, alongside softer imports, contributed to the overall positive economic indicators. However, investor sentiment remains weak, as gross fixed capital formation has declined for the third consecutive quarter.
Looking ahead, the growth momentum may encounter challenges, particularly due to new US tariffs. South African exports, including vehicles and citrus fruits, have been subjected to 30% levies, the highest rate for any country in sub-Saharan Africa. Recent manufacturing data indicated that factory sentiment has been negatively impacted by reduced business activity and sluggish demand, as these tariffs begin to affect exports.
Officials note that the full impact of US trade policies has yet to materialise, suggesting it will take time to assess the overall effect of these tariffs on South African exports.