South African GDP Growth Hit 2.1% y/y in Q3, Marking the Fastest Expansion Since Q3 2022
Bottom Line: Department of Statistics of South Africa (Stats SA) announced Q3 GDP growth on December 2. South African economy grew by 2.1% YoY in Q3, the fastest expansion since Q3 2022. We think that the growth momentum will continue to be supported by low inflation, improved consumer sentiment, fewer loadshedding, moderate oil prices and interest rate cuts despite uncertain global environment, slowing external demand and logistical constrains would be downside factors. We assess the economy will grow by 1.4% and 1.5% y/y in 2026 and 2027, respectively.
Figure 1: GDP Growth Rate (%, YoY), Q1 2022 – Q3 2025
Source: Continuum Economics
Department of Statistics of South Africa (Stats SA) announced Q3 GDP growth on December 2. South African economy expanded by 2.1% YoY in Q3, the fastest expansion since Q3 2022. South Africa’s economy grew 0.5% q/q in Q3, slower than the previous quarter’s revised 0.9% growth, which marked the fourth straight quarter expansion.
According to StatSA, 9 of the 10 sectors recorded higher output, with mining and agriculture performing well though electricity, gas and water contracted. The mining sector was the engine of the growth in this quarter demonstrating a notable surge of 2.3% y/y while the electricity, gas, and water industry shrank by 2.5% y/y.
Reuters reported on December 2 that a pickup in fixed investment for the first time in a year as a bright spot that could lift the future growth rate if sustained, while investments in transport equipment mainly drove the 1.6% increase in gross fixed capital formation - spending on fixed assets like machinery - in Q3.
Growth figures are supported by fewer power cuts (loadshedding) after Q2. Eskom announced on November 1 that the country has gone 168 consecutive days without loadshedding, with only 26 hours recorded between April 1 and October 9, 2025. Eskom’s summer outlook covering the period September 1, 2025 to March 31, 2026, also projected no load shedding due to sustained improvements in plant performance from the generation recovery plan.
The government was pleased with the announced Q3 growth figure as acting government spokesperson Nomonde Mnukwa said that “While challenges remain, the economy is on a path of gradual recovery as the government will continue implementing measures to support growth, investment and job creation.”
We assess the economy will grow by 1.4% and 1.5% y/y in 2026 and 2027, respectively while the National Treasury envisages that economy will expand by 1.5% y/y in 2026. We think that the growth momentum will continue to be supported by low inflation, improved consumer sentiment, fewer loadshedding, moderate oil prices and interest rate cuts despite uncertain global environment, slowing external demand and logistical constrains would be downside factors.