South African Economy Grew by 1.9% y/y in Q1
Bottom Line: Statistics South Africa (Stats SA) released the Q1 2026 growth figures on June 9. Economy grew by 1.9% y/y (0.5 q/q) in Q1, accelerating from an annual 0.8% advance in Q4 2025 supported by stronger outputs from service and agricultural sectors and a positive trade balance despite weakness in manufacturing. We believe Q1 growth was supported by low inflation, an absence of load-shedding, and interest rate cuts. However, this momentum will likely shift in Q2 as the economic impact of the Iran conflict begins to appear in the next data release.
Figure 1: GDP Growth Rate (%, y/y), Q1 2022 – Q1 2026
Source: Continuum Economics
Statistics South Africa (Stats SA) released the Q1 2026 growth figures on June 9. Economy grew by 1.9% y/y (0.5 q/q) in Q1, accelerating from an annual 0.8% advance in Q4 2025 supported by stronger outputs from service and agricultural sectors and a positive trade balance despite weakness in manufacturing. Q1 growth marked the sixth straight quarter of expansion.
According to Stats SA, nine of 10 sectors contributed to growth in Q1. The finance industry was the main positive contributor on the production side of the economy, expanding by 0.9% q/q. Exports of goods and services rose by 0.5% in Q1, supported by increased trade in mineral products, vegetable products and tobacco while imports declined by 2.6%. On the other side of the coin, manufacturing contracted by 0.8% q/q.
We think relatively low inflation, a power cuts (loadshedding)-free Q1 and interest rate cuts supported growth figures in Q1. The absence of power cuts was a key determinant of growth in this period. South Africa’s national utility, Eskom, announced on June 5 that the country has achieved 385 consecutive days of uninterrupted power supply, with only 26 hours of load shedding recorded in April and May 2025.
Ongoing conflict in Iran and high oil prices present significant external risks that are expected to severely slow Q2 growth. These effects will be reflected in the next release on September 8.