By Thanda Sithole
SA economy maintains positive momentum in 3Q25
Real GDP (not seasonally adjusted) grew by 2.1% y/y in 3Q25, up from an upwardly revised 0.9% y/y (previously 0.6% y/y) in 2Q25. The improvement was largely driven by a stronger-than-expected 49.9% y/y surge in agriculture, forestry and fishing. Excluding this notoriously volatile sector, GDP growth would have been closer to 1.1% y/y.
On a seasonally adjusted, non-annualised basis, GDP expanded by 0.5% q/q in 3Q25, following a revised 0.9% q/q increase in 2Q25 (previously 0.8% q/q), marking a fourth consecutive quarterly expansion. The outcome matched the Bloomberg consensus forecast of 0.5% q/q, but came in higher than our expectation of 0.2% q/q.
Nominal GDP grew by 5.0% y/y (and 2.3% q/q seasonally adjusted), up from 2.5% y/y and 1.5% q/q in 2Q25. This is positive for the current account balance and the government's fiscal outlook. Compensation of employees rose by 3.2% y/y, moderating from 4.3% y/y and 3.7% y/y in 1Q25 and 2Q25, respectively. At 3.2% y/y, growth in employee compensation was below the inflation rate of 3.4%, reversing recent real wage gains.
Outlook
Today's outcome, which came in better than expected, suggests upside risk to our 1.0% growth forecast for 2025 of around 0.2-0.3 percentage points (ppts). However, near-term concerns remain, including weakness in private sector fixed investment, a volatile agricultural sector, and ongoing global trade tensions. We will reassess our macroeconomic projections in the coming days.
Supply- and demand-side drivers
Mining; trade, catering and accommodation; finance, real estate and business services; and general government services each contributed 0.1pps to quarterly GDP growth, with q/q increases of 2.3%, 1.0%, 0.3%, and 0.7% respectively. Mining gains were driven by stronger production of PGMs, manganese ore and coal. The broader trade, catering and accommodation sector was supported by increased activity in wholesale and retail trade, motor trade, and accommodation and food services. Growth in finance, real estate and business services reflected higher activity in real estate services and other business services, while general government services benefitted from increased employment at national and provincial government levels and in extra-budgetary institutions.
Modest growth was also recorded in manufacturing (0.3% q/q), construction (0.1% q/q), transport, storage and communication (0.5% q/q), and personal services (0.3% q/q). The notoriously volatile agriculture, forestry and fishing sector grew by 1.1% q/q and an unexpected 49.9% y/y (not seasonally adjusted), underpinned by increased activity in field crops, horticulture and animal products.
The only sector to record a contraction was electricity, gas and water, which declined by 2.5% q/q after a modest 0.2% q/q rise in 2Q25, reflecting lower electricity production and consumption.
From the demand side, private household consumption increased by 0.7% q/q, following an upwardly revised 1.0% q/q gain in 2Q25 (previously 0.8% q/q), marking a sixth consecutive quarterly expansion. The strongest contributions came from:
Gross capital formation rose 2.6% q/q, up from 2.3% q/q, driven by an increase in inventory accumulation to R25.7 billion from R18.7 billion (previously R16.6 billion, annualised). Gross fixed-capital formation (investment in long-term productive assets) increased by 1.6% q/q, rebounding from a 1.6% q/q contraction in 2Q25. This was supported by:
The external trade balance (real net exports) weakened to a deficit of R70.0 billion (annualised) from -R50.2 billion in 2Q25. Exports (goods and services) grew 0.7% q/q, supported mainly by vegetable and mineral products. Imports grew faster at 2.2% q/q, reflecting higher demand for machinery and electrical equipment, mineral products, textiles, and animal and vegetable fats and oils.
