By Thanda Sithole
Key takeaways
In a nutshell
Real Gross Domestic Product (GDP) expanded by 0.4% q/q (seasonally adjusted) in 4Q25, following a downwardly revised 0.3% q/q in 3Q25 (previously 0.5%). The outcome exceeded both the Reuters consensus and our forecast of 0.3%. On an annual basis, growth moderated to 0.8% y/y, down from 2.1% y/y in 3Q25, largely reflecting a sharp reversal in agricultural growth to -12.8% from a 62.9% surge in 3Q25 (previously 49.9%).
Excluding agriculture, GDP growth would have been around 1.0%, indicating that the underlying expansion remained intact.
Outlook
While today's data suggest that economic growth of 1.1% for 2025 was slightly below our and consensus estimates of 1.3% (SARB: 1.3%; National Treasury: 1.4%), we are encouraged by the acceleration from 0.5% in 2024. Looking ahead, growth above 1% is expected to be sustained, rising closer to 2.0% by 2028, supported by ongoing structural reforms. We will continue to monitor recent global developments, including the Israel-US-Iran conflict, and their potential impact on the cyclical growth trajectory.
Supply-side (production) view
Quarterly GDP growth was largely driven by the finance, real estate and business services sector which expanded by 1.4% q/q, contributing 0.3-percentage points (ppts). Growth in this sector was underpinned by increased economic activity in other business services, financial intermediation, insurance and pension funding, auxiliary activities, and real estate activities. The rest of the sectors growth performances are shown in figure 2 below:
Demand-side view
Growth in household consumption remained strong at 1.2% q/q, faster than the 0.9% q/q growth recorded in 3Q25 (see Appendix). Consumption growth was broad-based across all categories with services at 0.8% q/q; non-durable consumption at 0.7% q/q; semi-durable consumption at 2.0% q/q and durable consumption at 3.0% q/q. Low and stable inflation, cumulative interest rate cuts and stable income has underpinned resilient growth in household consumption.
Total fixed investment grew by 1.3% q/q, following downwardly revised growth of 1.4% (previously1.6% q/q) in 3Q25. This outcome reflected divergent performance, with fixed investment by private business enterprises increasing by 2.4% q/q, marking the third successive quarter of expansion. Investment by public corporations increased by 6.5% q/q and investment by general government fell by 6.3% q/q. Overall, total fixed investment declined by 2.2% in 2025, compared to a decline of 3.9% in 2024. Inventories reflected drawdowns amounting to R6.2 billion in 4Q25, underscoring large decreases in trade, catering and accommodation, manufacturing and as well as mining.
Export volumes of goods and services declined by 0.6% q/q, dragged by decreased export flows of vehicles and transport equipment excluding large aircraft; vegetable products; and prepared foodstuffs, beverages and tobacco. Meanwhile import volumes of goods and services grew by 0.5% q/q, boosted by increased import flows of machinery and electrical equipment; vehicles and transport equipment excluding large aircraft; live animals and products; and vegetable products. As such, real net exports recorded a deficit of R92.1 billion compared to a deficit of R77.9 billion in 3Q25, dragging quarterly GDP growth by 0.3ppts.
