Another Significant Economic Gain for South Africa

South Africa recorded another encouraging performance in the third quarter, as real gross domestic product expanded by 0.5 percent. This marked the fourth successive quarter of positive growth, reflecting a continuation of the upward trajectory seen earlier in the year and broadly meeting the expectations held by market analysts and economic observers.

Key Takeaways

• Revised second-quarter data strengthened confidence in South Africa’s economic momentum: The upward adjustment to Q2 growth supported the view that the economy performed better than initially estimated.
• Tariff pressures from the United States created risks but had a milder-than-expected short-term impact: Early data suggested resilience, though longer-term effects may still emerge.
• Mining remained the dominant driver of third-quarter GDP performance: Strong output, especially in platinum group metals, reinforced the sector’s strategic role in the national economy.

Revised Data, Tariff Pressures and Mining Strength Shape South Africa’s Q3 Economic Outlook

The improvement in the July to September period followed a revised assessment of the second quarter’s data, which was adjusted upward to 0.9 percent from the previously reported 0.8 percent. This revision reinforced the view that the economy performed more robustly than initially estimated in the earlier part of the year. GDP revisions are common globally, as later data from businesses and tax systems typically provides a clearer national picture.

The revised data added to the momentum of what had already been considered a surprisingly resilient second quarter. At the time, several economists had anticipated a far more constrained outcome, expecting the figures to reflect a narrow expansion given the complex global and domestic pressures.

Concerns had also been raised about the potential strain on the South African economy moving into the third quarter, particularly following the introduction of the United States’ 30 percent reciprocal tariffs in August. These new measures were widely expected to create further obstacles for export-oriented sectors.

Sectors such as auto manufacturing and agriculture were among the industries most vulnerable to the tariff impacts. Despite the anticipated risks, early readings indicated that the adverse effect was less severe than many analysts had predicted, allowing the economy to maintain a degree of stability.

According to data released by Statistics South Africa, the primary force behind third-quarter GDP growth was the mining industry. This sector continued to display resilience, contributing significantly to the overall expansion recorded during the period. South Africa holds more than 80 percent of the world’s known platinum group metal reserves, giving mining exceptional strategic importance.

Sector Performance and Supply-Side Dynamics

Nine out of ten major industries on the production side of the economy registered growth during the third quarter. Mining and quarrying, agriculture, forestry and fishing, along with trade, catering and accommodation, were among the strongest performers, each showing notable improvements in activity.

Mining production rose by 2.3 percent, buoyed largely by increased output of platinum group metals. This growth was supplemented by gains in manganese ore, coal, chromium ore and copper, indicating broad support from a range of mineral commodities. Manganese is essential in global steel manufacturing, particularly for hardening processes.

Although declines were noted in iron ore, diamonds, nickel and gold, these reductions were not sufficient to offset the positive contributions made by the other mineral segments. As a result, the overall mining sector still delivered a meaningful contribution to GDP growth.

Construction Sector Returns to Growth

After three consecutive quarters of contraction, the construction sector returned to positive territory, registering a marginal increase of 0.1 percent. Growth in non-residential building projects and construction works helped lift the sector out of decline, although activity remained subdued. Analysts often track construction as a leading indicator of future economic dynamism, since it reflects long-term investment decisions.

Electricity, gas and water services were the sole industries to record a contraction in the third quarter, shrinking by 2.5 percent. Reduced electricity generation and consumption, combined with lower water usage, contributed to the overall weakness in this segment.

Demand-Side Strength and Spending Trends

On the expenditure side, the economy benefitted from stronger gross fixed capital formation, improved household consumption, higher export activity and increased government expenditure. These combined elements helped reinforce demand during the third quarter.

Household spending rose for the sixth consecutive quarter, climbing by 0.7 percent. Transport spending was the most significant contributor, supported in part by increased purchases of new vehicles as consumer confidence in this category showed steady improvement.

However, the categories relating to clothing and footwear, along with miscellaneous goods and services, experienced declines.

Gross fixed capital formation, which had declined for three straight quarters, rebounded with a 1.6 percent increase. This recovery was largely driven by greater investment in transport equipment. Capital formation is a long-term growth driver, as it expands a nation’s productive capacity.

The miscellaneous category under other assets also played an important role, supported predominantly by increased spending on information and communication technology equipment and software.

Despite the pressures associated with the United States’ tariff measures, South Africa recorded a 0.7 percent increase in exports. Growth in the trade of vegetable products and mineral commodities underpinned this resilience.

Imports rose by 2.2 percent, influenced by higher volumes of machinery and electrical equipment, mineral products, textiles and textile articles, and animal and vegetable fats and oils.

Conclusion

The developments across the second and third quarters highlight an economy that is demonstrating steady resilience despite external pressures and domestic challenges. The upward revision of earlier data, the contained short-term impact of international tariffs and the continued strength of the mining sector collectively point to an economic landscape that is stabilising, even if still operating below its full potential. While the momentum recorded in multiple industries is encouraging, sustained growth will depend on broader structural reforms, increased investment and long-term policy consistency to ensure that South Africa can build on these gains and move closer to the levels of expansion needed to address unemployment and support meaningful economic transformation.