Will global risks delay interest rate cuts?

SOUTH Africa’s modest economic growth is colliding with rising global risks, and economists now warn that interest rate relief may not come as soon as many households had hoped.

- NICOLA MAWSON

SOUTH Africa's economy posts modest 1.1% growth in 2025 – the strongest annual figure since 2022 – but fragile conditions and rising global risks from Middle East tensions could delay interest rate relief for households. | STATSSA

(STATSSA)

Statistics South Africa on Wednesday reported that the economy expanded by 0.4% in the fourth quarter of 2025, lifting full-year growth to 1.1% — the strongest annual performance since 2022, but still weak by historical standards.

PSG chief economist Johann Els said the fourth quarter figure was slightly stronger than expected, although underlying conditions remain fragile.

“South Africa's fourth quarter 2025 GDP came out a touch stronger than expected,” Els said.

Els noted that mining, manufacturing, electricity and construction all contracted during the quarter, while stronger performance from the financial sector and trade helped support the economy.

“The financial sector was more positive than expected, rising by 1.4% quarter-on-quarter. The trade sector also reflected consumer spending growth and was positive to the tune of plus 0.9% quarter-on-quarter,” Els said.

Despite the slightly better fourth quarter outcome, downward revisions to earlier quarters meant the economy still only grew by 1.1% for the year.