Staff Writer
Investor confidence in South Africa has strengthened recently, supported by positive domestic and global developments, the South African Reserve Bank has said.
These include South Africa’s removal from the Financial Action Task Force grey list, a more supportive fiscal outlook outlined in the 2025 medium-term budget policy statement, the formal adoption of a 3% inflation target, and an upgrade of the country’s foreign currency sovereign credit rating by S&P Global Ratings.
The rating upgrade was South Africa’s first in two decades.
Easing global trade tensions and higher commodity prices, particularly for gold and platinum group metals, also supported the rand. Rising domestic share and bond prices added to positive wealth effects.
Economic growth continued in the third quarter of 2025 but slowed. Real gross domestic product expanded by 0.5%, down from a revised 0.9% in the second quarter.
The slowdown reflected weaker growth in the primary and tertiary sectors and a slight contraction in the secondary sector.
The primary sector continued to grow, supported by agriculture and mining.
Agricultural output benefited from good rainfall and better crop yields.
The projected commercial maize crop for the 2024/25 season rose to 16.44 million tonnes, nearly 28% higher than the previous season.
Mining output increased due to higher production of platinum group metals, manganese ore, coal and chromium ore. Improved logistics, stronger demand and higher prices supported output, while iron ore and diamond production declined.
Manufacturing growth was supported by higher production of food and beverages, furniture, and motor vehicles. Weak demand, logistics challenges, and uncertainty around US trade policy continued to weigh on the sector.
Lower electricity generation and consumption affected the utilities sector.
The tertiary sector grew by 0.5% in the third quarter, with all subsectors recording gains.
Commerce benefited from higher wholesale and retail activity, motor trade, and tourism. Transport and communication services expanded further, supported by higher passenger rail usage and increased air transport and communication activity.
Finance, insurance, real estate and business services also grew, supported by higher real estate activity following interest rate cuts since late 2024.
Growth in real gross domestic expenditure slowed to 0.9% from 1.3%, reflecting weaker household and government consumption.
Gross fixed capital formation returned to growth, driven mainly by higher public sector investment. Household consumption remained the largest contributor to GDP growth, while net exports detracted as imports grew faster than exports.
Household consumption growth eased to 0.7%, in line with slower growth in disposable income.
Spending on durable goods increased, supported by a stable rand, lower inflation for durable goods, and reduced interest rates.
Household debt ratios declined slightly, and debt-servicing costs continued to ease.
Household net worth improved further, supported by rising equity prices and higher residential property values.
The FTSE/JSE All-Share Index reached new record highs after rising by 11.9% in the third quarter.
Employment increased by 248 000 between the second and third quarters of 2025, with gains across all major sectors. Informal sector employment rose sharply, partly due to improved survey coverage.
The official unemployment rate declined to 31.9% from 33.2%, while youth unemployment also fell.
Inflation pressures increased modestly. Headline inflation rose from 2.7% in March to 3.6% in October 2025, driven by higher fuel and food prices. Core inflation edged up to 3.1%.
Inflation expectations declined further, likely reflecting the adoption of the 3% inflation target.
South Africa’s trade surplus narrowed in the third quarter as imports grew faster than exports.
Mining and agricultural exports increased, supported by higher platinum group metals and citrus exports, while manufacturing exports declined.
The current account deficit narrowed to 0.7% of GDP, supported by improved income flows.
The rand strengthened during the third quarter, supported by a weaker US dollar, higher commodity prices, and domestic developments.
Lower inflation, interest rate cuts, and improved policy credibility contributed to lower government bond yields.
Money supply growth picked up, driven by stronger corporate deposits.
Credit extension increased as demand from businesses rose. Fiscal performance improved in the first half of the 2025/26 financial year, supported by higher revenue and a narrower borrowing requirement.
Caption
Investor confidence in South Africa has strengthened in recent months.
-Photo: Contributed
