South Africa's economy grew by 0.4% in the fourth quarter.

Investing.com – South Africa’s economy grew by 0.4% quarter-on-quarter in Q4 2025, slightly higher than the revised 0.3% increase in Q3, supported by strong consumer spending.

The Q4 result slightly exceeded the consensus forecast of 0.3% quarter-on-quarter by LSEG. Year-over-year, the economy grew by 0.8%, compared to 1.9% in Q3.

Industry segment data shows that most of the growth was driven by consumer-facing sectors. Wholesale and retail trade accelerated from a 0.4% quarter-on-quarter increase in Q3 to 0.9% in Q4.

The financial sector, which stagnated in Q3, grew by 1.4% quarter-on-quarter in Q4.

The industrial sector dragged down the economy, with manufacturing and mining contracting by 0.6% quarter-on-quarter in the previous quarter.

Spending segment data shows household consumption accelerated, increasing by 1.2% quarter-on-quarter, up from 0.9% in Q3.

Government consumption grew by 0.5% quarter-on-quarter, compared to 0.3% in Q2. Investment growth remained steady at 1.3% quarter-on-quarter. Net trade continued to weigh on GDP.

Capital Economics forecasts that South Africa’s economy will grow from 1.6% last year to about 2% this year, above market consensus.

The firm expects interest rate cuts, despite Middle East conflicts posing upside risks to inflation, due to moderate underlying price pressures in the economy.

Relaxation of fiscal policy in the budget is expected to provide a temporary boost, while supply-side constraints are also easing.

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