A surprise upsurge

SA's economy surpasses expectations in Q2 2025

- Frederick Mitchell

IN A welcome development for South Africa's economy, recent data revealed a surprise growth rate of 0.8% for the second quarter of 2025, surpassing market expectations set at 0.5%. This unexpected growth, concluding at the end of June, reflects a complex interplay of economic variables involving demand, supply, consumer confidence, and investment trends.

Demand dynamics

Retail resilience and credit consumption

Key indicators of demand within the South African economy, such as retail and wholesale sales, have painted a nuanced picture.

Retail sales rose by 0.9% from the first quarter, signalling resilience among consumers. Conversely, wholesale trade faced a contraction of 0.4% over the same period, indicative of mixed consumer confidence and spending patterns.

Total imports saw a slight decline of 0.5%, highlighting a cautious consumer environment. However, demand for credit increased by 1.8%, with consumers increasingly tuming to short-term borrowing to cope with rising living costs.

This trend is exacerbated by increased administered costs, including hikes in electricity and water prices.

Interest rate reductions, in line with low consumer inflation, provided some relief, leaving households with more disposable income after debt servicing.

Supply insights

Mining momentum and manufacturing challenges