South African Economy Grew by 1.1% in 2025 Supported by Stronger Agriculture, Trade and Finance Activities
Bottom Line: Statistics South Africa (Stats SA) released the Q4 2025 and full-year GDP growth figures on March 10. Following a revised 0.3% q/q expansion in Q3, the economy grew by 0.4% q/q (0.8% y/y) in Q4. For the full year, the economy expanded by 1.1%—its fastest pace in three years—supported by stronger output in the agriculture, trade, and finance sectors. We think low inflation, improved consumer sentiment, a power cuts (loadshedding)-free Q4, and interest rate cuts supported strong growth figures.
Figure 1: GDP Growth Rate (%, y/y), Q1 2022 – Q4 2025
Source: Continuum Economics
Statistics South Africa (Stats SA) released the Q4 2025 and full-year GDP growth figures on March 10. Following a revised 0.3% q/q expansion in Q3, the economy grew by 0.4% q/q (0.8% y/y) in Q4. The Q4 performance marked the fifth consecutive quarter of economic growth.
South African economy grew at the fastest pace in three years in 2025 with 1.1%, helped by stronger output in the agriculture, trade and finance activities. According to Stats SA, seven of 10 sectors contributed to growth in 2025, with farm output growing 17.4%, trade, catering and accommodation expanding 2.3%, finance 1.9% and transport 0.8%. We assess 2025 growth was also fuelled by low inflation, improved consumer sentiment, fewer loadshedding, moderate oil prices and interest rate cuts despite uncertain global environment and logistical constrains.
Additionally, the absence of power cuts was a key determinant of growth last year. South Africa’s national utility, Eskom, announced on February 13 that the country has achieved 273 consecutive days of uninterrupted power supply, with only 26 hours of load shedding recorded in April and May 2025. Furthermore, we believe that the gradual inclusion of private sector participation in the rail and port industries (via the Transnet recovery) also supported economic expansion.
The National Treasury of South Africa maintains an optimistic growth outlook, projecting a 1.6% growth rate as of February 2026, largely driven by the benefits of lower inflation and interest rate cuts. According to Bloomberg, an accelerated pace of structural reforms has bolstered business sentiment and raised expectations for a medium-term recovery, with the National Treasury forecasting growth will rise to 2% by 2028.
However, the government remains cautious about external risks, particularly how a prolonged conflict in Iran and sustained high oil prices could dampen growth. "The war is worrying, especially if it drags on for more than four weeks," Finance Minister Enoch Godongwana noted in an interview on March 5. We think the government continues to rely on structural reforms facilitated through Operation Vulindlela and public-private partnerships to sustain momentum.