Even if economic growth did really well in the fourth quarter, there is not a big chance that economic growth will exceed 1%, economists say.
The gross domestic product (GDP) figures for the third quarter, released on Tuesday morning, show that the economy grew by just 0.5% in the third quarter. Although the economy grew for the fourth consecutive quarter, it is from such a low base that there is no reason to celebrate.
Frank Blackmore, lead economist at KPMG, says looking at the underlying drivers, nine out of the ten industries surveyed to calculate the GDP for the quarter recorded positive growth between the second and third quarters of 2025, a good sign, as it indicates a broad distribution of growth across the economy.
“Overall, growth in the first three quarters stands at 0.1% for the first quarter, 0.9% for the second quarter and 0.5% for the third quarter, averaging around 0.5%, which leaves GDP likely to come in at under 1% for the year as a whole, even with an optimistic fourth quarter.”
Thanda Sithole, senior economist at FNB, says today’s outcome, which came in better than expected, suggests upside risk to FNB’s 1.0% growth forecast for 2025 of around 0.2 to 0.3 percentage points. However, she says, near-term concerns remain, including weakness in private-sector fixed investment, a volatile agricultural sector and ongoing global trade tensions.
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A modest economic recovery is on the way, according to GDP
Professor Raymond Parsons, economist at the NWU Business School, says it is welcome news that the economy showed its fourth consecutive increase in economic activity in the third quarter, although it was off a low base.
“This expected better growth trend confirms that a modest economic recovery is indeed underway, driven by a combination of well-known favourable developments. Another positive factor is the 1.6% rise in fixed capital formation, which is needed to achieve sustained job-rich growth. On present evidence, it seems likely that economic growth in 2026 will be about 1.4%, in line with the consensus forecast.”
He says that the remaining vulnerabilities in the growth outlook stem from the slower 0.5% GDP growth in the third quarter, compared to 0.9% in the previous quarter, the continued poor performance of manufacturing, a key lagging sector, and the expected negative impact of US import tariffs on the economy.
“In the coming year, a sufficient number of firms must therefore continue to feel that growth prospects justify their making fresh plans for expansion. The green shoots of the current economic recovery and investor confidence must still be nurtured by favourable policy responses.
“The challenge remains to implement robust growth-friendly policies that will further build on the steadier foundation of the incipient economic upturn that has become apparent in 2025.”
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GDP signals continued steady recovery for economy
Casey Sprake, economist at Anchor Capital, says the economy continued its steady recovery in the third quarter, with real GDP expanding by 0.5% in line with market expectations. “This marks the fourth consecutive quarter of positive growth, extending a run not seen since before 2018.
“A slight upward revision to second quarter growth (now 0.9% q/q) adds further momentum. One of the most encouraging developments in today’s release is the rebound in gross fixed capital formation.
“After three quarters of contraction, investment rose by 1.6%, contributing 0.2 percentage points to overall growth. Importantly, the improvement was broad-based, hinting at a tentative rebuilding of private-sector confidence and laying the groundwork for stronger medium-term productivity gains.
“Looking ahead, this latest print supports the full-year GDP forecast of the South African Reserve Bank of 1.3% for 2025. In fact, with the second quarter revised higher, the economy now needs only a 0.4% expansion in the fourth quarter to meet that projection, a pace that appears well within reach given the underlying momentum.
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Broader implications: SA’s growth pulse shows gradual strengthening
“The broader implication is that South Africa’s growth pulse is gradually strengthening. While still modest by historical and emerging-market standards, the consistency of recent quarterly expansions signals improving economic resilience, aided by easing inflation, lower interest rates and early signs of an investment recovery.
“If sustained, this trajectory could help lift confidence, support job creation and provide a firmer foundation for fiscal consolidation efforts heading into 2026.”
