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Although economists expected that South Africa’s GDP would contract in the first quarter, GDP just averted negative growth.
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South Africa’s GDP grew marginally in the first quarter, with agriculture keeping the economy afloat and averting negative economic growth.
Statistics SA announced this morning that the South African economy kept its head above water in the first quarter of 2025, but expanding by only 0.1% compared to the fourth quarter of 2024, with only four of the ten industries on the production (supply) side of the economy recording positive gains.
Agriculture saved the day, driving most of the upward momentum. Household spending, stronger exports and a drawdown in inventories kept the expenditure (demand) side of the economy in positive territory, Statistics SA says.
According to the statistics, agricultural production increased by 15.8%, adding 0.4 of a percentage point to gross domestic product (GDP) growth, thanks to good rains, with horticulture benefitting the most, although animal products also fared well.
Statistics SA says without the boost from agriculture, GDP would have contracted by 0.3%.
This graph shows how the ten industries contributing to the country’s GDP fared:
Transport, storage and communication were the second-largest positive contributors, with gains recorded in land transport, air transport and transport support services.
The data shows that consumer activity was also stronger, with trade, catering and accommodation expanding by 0.5% and retail trade, motor trade, accommodation and food and beverages making a positive contribution.
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Mining and manufacturing, biggest drags on GDP as expected
Mining and manufacturing were the biggest drags in the first quarter, according to Statistics SA. Together, these two industries shaved 0.4 of a percentage point off GDP growth.
Mining weakened by 4.1%, with platinum group metals the most significant negative contributor. Coal, chromium ore, gold, copper and nickel also disappointed, while iron ore, manganese ore and diamonds recorded gains, but not enough to lift the industry into positive territory.
Manufacturing activity slowed on the back of weaker production levels for petroleum and chemicals, food and beverages and motor vehicles and other transport equipment.
Only three of the ten manufacturing divisions experienced a favourable quarter, according to the latest monthly manufacturing release. These included textiles and clothing; wood, paper and publishing and radio, television and communication and professional equipment.
After a break of 310 days, load shedding returned in the first quarter and contributed to a 2.6% decline in electricity, gas and water, the largest contraction since the third quarter of 2022, when it was -2.8%. Water consumption was also down, adding to the industry’s poor showing, Statistics SA says.
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GDP expenditure also muted
The expenditure side of the economy was also marginally positive, growing by only 0.1% in the first quarter of 2025 compared to the fourth quarter of 2024.
A drawdown in inventories, exports and household consumption contributed positively, while imports, gross fixed capital formation and government consumption weighed negatively on growth, as this graph shows:
The R9.0 billion drawdown in inventories occurred across several industries, including transport, storage and communication, trade, catering and accommodation, manufacturing, finance, real estate and business services and personal services.
Statistics SA says this represents the fifth consecutive quarter of inventory drawdowns in the economy. A drawdown is the percentage difference between the peak of an investment and its lowest point, and measures an investment’s historical risk.
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Exports expanded, but imports also
Exports expanded for a second straight quarter, increasing by 1.0%. Vegetables, vehicles and transport equipment (excluding large aircraft) and mineral products underpinned the increase, according to Statistics SA.
Gross fixed capital formation, which includes infrastructure development and investment in fixed assets, declined by 1.7%. Statistics SA says there was a slowdown in economic activity related to residential buildings and construction works, while investments in machinery and other equipment and transport equipment were also weaker.
Imports increased by 2.0% in the first quarter, contributing negatively to economic growth. The increase was driven mainly by stronger demand for chemical products, mineral products and machinery and electrical equipment, Statistics SA says.
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Household consumption expanded for fourth consecutive quarter
Household consumption expanded for a fourth consecutive quarter, buoyed by a rise in spending on transport (particularly, on vehicles), food and non-alcoholic beverages, restaurants and hotels, miscellaneous goods and services and health.
However, Statistics SA points out, households cut back on recreation and culture and communication. This graph shows households’ spending on product categories:
