Mining revival and consumer spending lift South Africa’s growth

South Africa’s economy surprised on the upside in the second quarter of 2025, with Gross Domestic Product (GDP) expanding by 0.8% quarter on quarter and 0.6% year on year, buoyed by a rebound in mining and increased consumer spending.

Abigail Moyo, spokesperson for the trade union UASA, described the performance as a welcome development.

“The GDP growth in the second quarter of 2025 is promising news for the South African economy. This growth was supported by a strong recovery in the mining sector and increased consumer spending,” she said.

Moyo added that while the outcome provided hope for lower inflation and reduced debt burdens, growth remained too low to tackle unemployment.

“We cannot ignore that current growth levels are insufficient to offset population growth and rising unemployment,” she said.

Thanda Sithole, senior economist at FNB, said the outcome exceeded market expectations.

“On a seasonally adjusted basis, the economy expanded by 0.8% quarter on quarter, sustaining momentum after the 0.1% rise in the previous quarter. This was above both our forecast and the Reuters consensus of 0.5%,” Sithole said.

He added that resilience in sectors such as mining, manufacturing and trade, with household spending rising for a fifth consecutive quarter.

“Private business enterprise investment rose 5.6% despite subdued confidence, which is encouraging,” he added.

Labour federation Cosatu also welcomed the rebound but flagged serious risks.

“We are pleased by the 1.8% increase in manufacturing and 3.7% in mining. But we fear it may be temporary given the United States’ 30% tariff hike on South African exports and the devastating impact it may have on local industries and jobs,” the organisation said in a statement.

Cosatu reiterated its call for urgent interventions, including more affordable electricity and improved logistics through Transnet and Metro Rail.

“If the economy is to begin generating permanent, decent jobs and reduce our dangerously high 42.9% unemployment rate, then South Africa needs to reach an annual GDP growth rate of 3% This must be government and the nation’s priority,” the federation added.

Investec economist Lara Hodes cautioned that the latest figures still reflected a subdued economy.

“The outcome is below 1% and as such is reflective of a domestic economy that continues to face a myriad of structural challenges, notably on the logistics front,” she said.

Hodes highlighted that the mining, manufacturing and trade sectors provided the largest positive contributions to growth, but construction remained weak.

“High costs of production and tariffs on exported goods to the US will adversely affect a number of domestic industries, including manufacturing,” she added.

Despite these concerns, optimism is building that 2025 could still close stronger than expected.

Moyo said UASA was encouraged by improving inflation trends and company earnings, while Sithole projected GDP growth of 1% this year, gradually rising to 1.9% by 2027.

The second quarter rebound has provided a rare boost of confidence.

The challenge for policymakers, businesses and workers is to transform these green shoots into lasting, broad-based growth that delivers jobs and relieves the strain on households.

BUSINESS REPORT