South Africa’s GDP inches higher, but consumer weaknesses pose risks ahead

SOUTH Africa's Gross Domestic Product (GDP) for the first quarter surprised on the upside showing growth of 0.5% quarter-on-quarter and annual growth moving close to 2%.

- ASHLEY LECHMAN

While the result offered some encouragement in a difficult economic environment, Citadel chief economist, Maarten Ackerman, cautioned that the data reflected conditions before the latest global and domestic headwinds began to intensify.

Ackerman told Business Report: “SAs first-quarter GDP number came in slightly ahead of expectations and confirms that the economy still has the underlying capacity to generate growth. However, it is important to recognise that this is largely a pre-geopolitical conflict number, supported by the continuation of favourable tailwinds from 2025, including strong commodity prices and another solid contribution from agriculture.”

“Agriculture was the standout performer in the quarter, expanding by 3.9%, while the finance sector remained one of the economy’s most consistent contributors. Encouragingly, growth was relatively broad-based, with all sectors except manufacturing contributing positively,’ he highlights.

“A broader-based growth profile is a positive signal, because it suggests that the recovery is not being driven by one sector alone; the fact that most sectors contributed positively gives us a better foundation than a narrowly concentrated growth outcome would have done,” he said.

“Beneath the positive headline number, there are signs of fragility. Household consumption, a key driver of SA’s consumer-led economy, slowed sharply to just 0.1% in the quarter, down from 1.2% in the previous quarter,’ notes Ackerman.

“The sharp slowdown in household consumption is concerning, consumers were already under pressure before the latest geopolitical and inflationary risks emerged, which suggests that households may find the coming quarters increasingly difficult?’ he cautioned.