South Africa’s gross domestic product (GDP) contracted by 0.2% quarter-on-quarter for the second quarter, following growth of 0.4% in the first quarter of the year, Statistics South Africa (Stats SA) reports. 

The manufacturing industry contracted by 1.8%, contributing -0.2 of a percentage point, to the overall GDP figure. Seven of the ten manufacturing divisions reported negative growth rates. The largest negative contributions were reported for the food and beverages; furniture and ‘other’ manufacturing; and basic iron and steel, nonferrous metal products, metal products and machinery divisions.

Stats SA's data shows that the mining and quarrying industry also contracted by 3%, contributing -0.1 of a percentage point to the overall figure. The largest negative contributors were platinum group metals (PGMs), manganese ore, gold and iron-ore.

Further, the trade, catering and accommodation industry decreased by 1.9%, contributing -0,2 of a percentage point. Stats SA notes that decreased economic activities were reported for wholesale trade, motor trade and food and beverages.

North-West University Business School economist Professor Raymond Parsons says the contraction in second-quarter GDP was expected and confirms the “bad knock” the South African economy took – together with many other economies – as a result of the global energy shock in recent months.

“After opening the year on a positive note with 0.4% GDP growth in the first quarter, the setback in South Africa’s subsequent growth performance reflects the strong pressure it faced in recent months from severe global headwinds on the twin growth and inflation fronts.

“The prospect at the beginning of 2026 that the economy would immediately build on the incipient recovery seen in the second half of 2025 has unfortunately not been realised.

“In the latest GDP figures, while finance, business services and transport still appear to be ‘leading’ sectors, mining and manufacturing are for now the ‘lagging’ ones in the growth outlook. Gross fixed capital formation, which is necessary for sustained job-rich growth, has also disappointed,” he comments.

Parsons notes, however, that while high-frequency economic data in the third quarter have been mixed, there is evidence that the recovery of the South African economy has been interrupted and delayed rather than “definitively derailed”.

“Household spending appears stable. A plausible central forecast is now about 1.2% real GDP growth in 2026, but that is lower than the broad consensus of about 1.6% growth anticipated earlier in the year.”

He adds that better growth prospects remain vulnerable to renewed Middle East escalation, weak fixed investment, borrowing costs and policy uncertainty.

“Domestic policy must, therefore, still act to mobilise available tailwinds and reinforce a resumed economic momentum. Changed economic circumstances this year now also have important implications for the South African Reserve Bank’s Monetary Policy Committee meeting on September 23, as well as the key policy choices in the Medium Term Budget Policy Statement due on October 21,” Parsons points out.

OTHER STATISTICS
Meanwhile, Stats SA reports that the finance, real estate and business services industry increased by 0.3%, contributing 0.1 of a percentage point, with the main contributors having been financial intermediation, insurance and pension funding, and other business services.

The transport, storage and communication industry grew by 0.9%, contributing 0.1 of a percentage point, with increased economic activity reported for land transport.

General government services increased by 1%, contributing 0.1 of a percentage point. This was mainly due to an increase in compensation of employees in extra-budgetary and higher education institutions and provincial government, Stats SA points out.

The personal services industry increased by 0.6%, contributing 0.1 of a percentage point.