Economy extends growth streak in Q3

Sequential GDP growth decelerates: South Africa's GDP increased 0.5% in seasonally adjusted quarter-on-quarter terms in Q3, decelerating from an upwardly revised 0.9% expansion in the previous quarter. Q3’s increase was in line with market expectations and marked the fourth consecutive rise—the longest growth streak since the post-pandemic recovery in 2020–2021.

Fixed investment is a bright spot: Compared to the prior quarter's data, readings in Q3 softened for private consumption—which accounts for roughly two-thirds of GDP—(+0.7% in seasonally adjusted quarter-on-quarter terms vs +1.0% in Q2) and government consumption (+0.3% vs +0.9% in Q2). In contrast, readings strengthened for fixed investment (+1.6% vs -1.6% in Q2), exports of goods and services (+0.7% vs -3.3% in Q2) and imports of goods and services (+2.2% vs -2.0% in Q2). Growth in private consumption reflected increased purchases of new vehicles, while the rebound in fixed investment was due to higher investment in transport equipment. Looking at sectoral data, growth was driven by the mining, trade and transport sectors. In annual terms, the economy expanded 2.1% in Q3, up from an upwardly revised 0.9% rise in the previous quarter, overshooting market expectations.

Growth outlook improves, but challenges remain: Our Consensus is for the economy to continue growing ahead; sequential GDP growth is seen decelerating further in Q4 before stabilizing in H1 2026 and gradually regaining steam in H2. Our panelists expect GDP growth to accelerate through our forecast horizon to 2030, when it should hit a nine-year high. In 2026, the improvement will come from the delayed impact of lower interest rates, which, coupled with a low base of comparison, will lead to a rebound in fixed investment. Moreover, both public spending and exports of goods and services will return to growth in 2026. That said, structural roadblocks remain, including sky-high unemployment and logistics bottlenecks in ports and the rail network. Extreme weather, renewed power cuts, plus tariffs on South African exports from the U.S.—the country’s second-largest trading partner—threatening key industries and thousands of jobs are further downside risks.

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