It seems that the Reserve Bank is not too negative about the South African economy, as it listed the good and the bad.
Several positive developments lifted investor sentiment in South Africa, such as the country’s exit from the greylist, an improved fiscal outlook presented in the 2025 Medium Term Budget Policy Statement, the announcement of a new 3% inflation target and an upgrade of South Africa’s foreign currency sovereign credit rating by S&P Global Ratings, the first in two decades.
Easing global trade tensions and higher commodity prices, especially for gold and platinum group metals (PGMs), supported the exchange value of the rand, while the continued rally in domestic share and bond prices contributed to positive wealth effects.
The South African Reserve Bank (Sarb) shared this news in its latest Quarterly Bulletin, a key publication that provides detailed economic statistics, an analysis of South Africa’s economy, financial market data and articles on economic trends.
The Reserve Bank’s key findings
The key findings in the Quarterly Bulletin include:
#1: Economic activity in South Africa continued to expand in the third quarter of 2025, although the growth rate in real gross domestic product (GDP) slowed to 0.5% from a revised 0.9% in the second quarter. The moderation reflected slower growth across the primary and tertiary sectors, while the secondary sector experienced a slight contraction.
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#2. Growth in real gross value added (GVA) in the primary sector was driven by sustained increases in both agriculture and mining, albeit at a slower pace. Agricultural output was supported by higher yields in field crops and horticultural and animal products, despite ongoing challenges such as animal disease outbreaks and rising input costs. Mining production also benefitted from stronger external demand for certain commodities, improved logistics and higher commodity prices, particularly for PGMs.
#3. Growth in real gross domestic expenditure moderated from 1.3% in the second quarter of 2025 to 0.9% in the third quarter, reflecting slower growth in both household and government consumption expenditure. However, real gross fixed capital formation returned to growth in the third quarter, alongside further accumulation of real inventory holdings.
#4. Growth in real final consumption expenditure by households slowed slightly to 0.7% in the third quarter of 2025, in line with the slower growth in their real disposable income. Spending on durable goods rose sharply, supported by the stable exchange value of the rand, subdued consumer price inflation for durable goods and lower interest rates.
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#5. The ratio of household debt to disposable income edged lower to 61.6% in the third quarter of 2025 from 62.1% in the previous quarter, as household debt increased at a slightly slower pace than nominal disposable income. Households’ cost of servicing debt relative to disposable income fell to 8.5% from 8.7% over this period.
#6. Households’ net worth continued to improve in the third quarter of 2025, as the market value of their total assets increased more rapidly than their total liabilities. The rise in assets was largely due to a notable increase in share prices, as both domestic and global equity prices rallied, with the FTSE/JSE All-Share Index reaching new all-time highs after surging by 11.9% in the third quarter. The value of housing stock also rose further as residential property prices continued to increase.
#7. Total household-surveyed employment increased further by 248 000 from the second to the third quarter of 2025, with job gains recorded across all three main sectors. Informal sector employment increased significantly, partly due to improved coverage after Statistics South Africa implemented methodological changes to its Quarterly Labour Force Survey to align with international best practice. Nevertheless, the year-on-year growth in total employment moderated from 0.9% in the second quarter to 0.6% in the third quarter of 2025. South Africa’s total labour force declined to 25.1 million people in the third quarter of 2025, as the decrease in the number of the officially unemployed outweighed the increase in employed people. This lowered the official unemployment rate from 33.2% in the second quarter to 31.9% in the third, with the youth unemployment rate also coming down.
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#8. Domestic inflationary pressures increased somewhat in recent months, reflecting a gradual reversal of the earlier disinflationary trend, primarily due to a slower pace of decline in fuel prices and higher food prices. Headline consumer price inflation rose gradually from a low of 2.7% in March 2025 to 3.6% in October, as both goods and services price inflation edged up.
#9. South Africa’s trade surplus narrowed further in the third quarter of 2025 as the value of merchandise imports grew faster than that of total goods exports. Exports were suppressed by a notable decline in the value of gold exports due to a lower physical quantity of gold exported. Despite a further significant rise in the US dollar price of gold in the third quarter, the average realised rand price of gold increased only marginally due to the rand appreciating against the US dollar over this period.
#10. South Africa’s total external debt rose from US$176.5 billion at the end of March 2025 to US$180.2 billion at the end of June, mainly due to a rise in rand-denominated debt. This was driven by non-resident net purchases of bonds in the domestic capital market and the appreciation of the rand against the US dollar during this period.
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MTNPS reaffirmed government’s commitment to achieve fiscal targets
The Sarb says in the Quarterly Bulletin that the 2025 MTBPS reaffirmed the government’s commitment to achieve its fiscal targets. Economic growth is expected to improve over the medium term as investment increases, driven by government plans to boost infrastructure spending and advance key structural reforms.
The consolidated government budget deficit as a percentage of GDP is projected to decrease from 4.7% in fiscal 2025/26 to 2.9% in fiscal 2028/29. This largely reflects a sustained increase in the projected primary surplus, which is also expected to stabilise the national government’s debt-to-GDP ratio at 77.9% in fiscal 2025/26, the Sarb says.
