South Africa’s economy continued to grow in the third quarter but fresh data shows that much of the momentum now rests on public sector investment rather than private capital. Statistics South Africa reported a 0.5% rise in GDP for the quarter, easing from 0.9% in the previous three months.
The expansion remained broadly based across the economy, with nine out of ten industries recording growth. Mining was one of the strongest performers, boosted by higher production of platinum group metals, manganese and coal. Agriculture also delivered solid gains across field crops, horticulture and animal products, while manufacturing posted a modest improvement. Household spending increased as consumers benefited from a relatively low inflation and interest rate environment. Investment activity also strengthened, driven by higher spending on transport equipment, software, machinery and construction, although investment in residential buildings declined.
The electricity, gas, and water sector was the only industry to contract, continuing to weigh on overall performance. Economist Elna Moolman said the outcome met expectations, describing the quarter as “quite a broad-based expansion”. She added that “consumer spending continued growing albeit at a slightly softer pace”. Moolman highlighted that the uplift in investment was “almost entirely due to the public sector’s investment growth,” noting that private sector investment rose by only 0.1%.
This, she said, provides “further evidence of ongoing traction with the government’s growth supportive fixed investment program”. Despite the softer quarterly momentum, the overall outlook remains cautiously positive. Moolman concluded, “We still expect economic growth to improve on a sustainable basis in the medium term.” The South African Reserve Bank expects growth to average 1.3% this year.