Image Source: The Citizen
Local – South Africa’s economy grew by just 0.1% in the first quarter of 2025, reflecting a continued but fragile recovery. This followed a 0.4% increase in the final quarter of 2024. Despite this sluggish growth, the country has made notable progress since the COVID-19 pandemic, with GDP recovering from a low of R954 billion in Q2 2020 to R1.17 trillion by early 2025.
Agriculture was the star performer this quarter, making the most significant positive contribution to GDP.
“The agriculture, forestry and fishing industry increased by 15.8%, contributing 0.4 of a percentage point to the positive GDP growth. This was primarily due to increased economic activities reported for horticulture and animal products,” Statistics South Africa (Stats SA) said on Tuesday.
Other service-oriented sectors also saw gains. The transport, storage and communication industry recorded a 2.4% increase, lifted by higher activity across land and air transport.
Finance, real estate, and business services increased by approximately 0.2%, contributing 0.1% to the GDP. Increased economic activity was reported in insurance and pension funding, as well as auxiliary activities.
“The trade, catering and accommodation industry increased by 0.5%, contributing 0.1 of a percentage point. Increased economic activities were reported for retail trade, motor trade, accommodation and food and beverages,” Stats SA said.
However, the gains were largely offset by contractions in key industries such as manufacturing and mining.
“The largest negative contributions were reported for the petroleum, chemical products, rubber and plastic products; food and beverages; and motor vehicles, parts and accessories and other transport equipment divisions.”
“The mining and quarrying industry decreased by 4.1%, contributing -0,2 of a percentage point. The largest negative contributors were platinum group metals,” the institution noted.
Spending Holds, While Trade and Investment Falter
Household consumption rose by 0.4%, helping to mitigate the impact of struggling industries. Expenditure grew across multiple categories.
“The main positive contributors to the increase in HFCE were expenditures on transport \[1.1% and contributing 0.2 of a percentage point], food and non-alcoholic beverages \[0.5% and contributing 0.1 of a percentage point], restaurants and hotels \[1.4% and contributing 0.1 of a percentage point], ‘other’ \[0.6% and contributing 0.1 of a percentage point] and health \[0.8% and contributing 0.1 of a percentage point].”
Household spending also weakened in areas such as recreation and culture, communication, and housing-related utilities. Meanwhile, gross fixed capital formation dropped by 1.7%, subtracting 0.2 percentage points from GDP.
Government spending and investment both declined in the first quarter. Final consumption expenditure by the general government fell by 0.1%, mainly due to lower compensation of employees and reduced spending on goods and services.
“Gross fixed capital formation decreased by 1.7%, contributing -0.2 of a percentage point. The negative contributors to the decrease were residential buildings \[-5.8% and contributing -0.6 of a percentage point], machinery and other equipment \[-1.4% and contributing -0.6 of a percentage point], construction works \[-2.8% and contributing -0.5 of a percentage point] and transport equipment \[-3.1% and contributing -0.3 of a percentage point],” Stats SA said.
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Net Exports Drag on Growth
Trade activity presented a mixed picture in the first quarter, as rising imports outpaced export growth, ultimately weighing down the overall GDP. This imbalance in trade resulted in a negative contribution from net exports.
“Net exports contributed negatively \[-0.3 of a percentage point] to expenditure on GDP. Exports of goods and services increased by 1.0%, largely influenced by increased trade in vegetable products, vehicles and transport equipment, excluding large aircraft and mineral products.
“Imports of goods and services increased by 2.0%, largely influenced by increased trade in chemical products, mineral products and machinery and electrical equipment,” the statement said.
