South Africa's growth: A step forward, but not enough for job creation
Economic growth seems on track for above 1% by year-end
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South Africa’s economic growth in the third quarter will have surprised one economist by being on the upside, and disappointed another.
Yet, gross domestic product is still nowhere near the figure needed for meaningful job creation, which Investec chief economist Annabel Bishop puts at around 3%.
The figure came in at 0.5% in the three months to September when compared with the stronger 0.8% seen last quarter.
However, economists seem confident that South Africa will end the year with a neat little Christmas present of growth at slightly above 1%.
Investec economist Lara Hodes had anticipated that growth will come in at “a marginal 0.3%”. Investec is expecting growth for the year of around 1.3%.
Full year expectations are in line with the South African Reserve Bank and slightly higher than National Treasury.
PSG Financial Services chief economist Johann Els is more confident and will have been let down by the number.
Els’ money had been on a gain of 0.6%.
“Growth has been trending somewhat better this year than consensus expectations earlier in 2025. My full-year forecast has been around 1.2% to 1.3% since March,” said Els.
Els added that “growth may even come out closer to 1.4%. While that remains weak, it is still an improvement on the 0.5% recorded in 2024”.
This morning, Statistics South Africa said that nine of the ten production side industries such as mining – all of which should be the basis for driving growth – were stronger this quarter.
Impetus came from mining and quarrying, forestry and fishing, as well as trade, catering and accommodation.
Els said there are genuine green shoots for stronger growth such as easing structural constraints, lower inflation, and declining interest rates.
Yet, Els noted that the investment cycle continues to lag, posing a risk to a more meaningful upswing.
“I continue to expect a medium-term improvement: from the roughly 1% average of the past 12 to 13 years to around 2.5% to 3% over the medium term,” said Els.
However, labour-market challenges such as skills shortages and regulation will keep growth from reaching the 5% to 6% South Africa ultimately needs, Els cautioned.
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