BUSINESS NEWS - South Africa’s economic recovery lost momentum in the second quarter of 2026, with Gross Domestic Product (GDP) contracting by 0.2%, according to figures released by Statistics South Africa (Stats SA) on Tuesday.
The contraction follows growth of 0.4% in the first quarter and reflects weaker activity across several key sectors of the economy.
Manufacturing and mining weigh on growth
The trade, catering and accommodation industry contracted by 1.9%, making it one of the largest contributors to the decline.
Stats SA said lower activity was recorded in wholesale trade, motor trade, and food and beverage services.
Manufacturing also fell sharply, contracting by 1.8% and contributing -0.2 of a percentage point to the overall GDP result.
Seven of the 10 manufacturing divisions recorded negative growth.
The biggest declines came from food and beverages; furniture and other manufacturing; as well as basic iron and steel, non-ferrous metal products, metal products and machinery.
Mining and quarrying contracted by 3%, contributing a further -0.1 of a percentage point.
The largest negative contributors within the mining sector were platinum group metals, manganese ore, gold and iron ore.
Some sectors buck the trend
Not all parts of the economy contracted during the quarter.
Finance, real estate and business services recorded marginal growth of 0.3%, contributing 0.1 of a percentage point to GDP.
Stats SA said the increase was driven mainly by financial intermediation, insurance and pension funding, and other business services.
Transport, storage and communication grew by 0.9%, contributing 0.1 of a percentage point, with increased activity reported in land transport.
General government services increased by 1%, also contributing 0.1 of a percentage point. Stats SA attributed the increase mainly to higher compensation of employees in extra-budgetary and higher education institutions, as well as provincial government.
Personal services grew by 0.6%, contributing another 0.1 of a percentage point, supported by increased activity in community services and other producers.
Households continue to spend
Despite the overall contraction, household final consumption expenditure increased by 0.4%, contributing 0.3 of a percentage point to GDP.
Spending on food and non-alcoholic beverages was one of the strongest positive contributors, rising by 1.2% and contributing 0.2 of a percentage point.
Households also increased spending on other goods and services by 0.6%, recreation and culture by 0.8%, and health by 0.7%.
However, this was partly offset by declines in spending on housing, water, electricity, gas and other fuels, as well as transport, communication, and clothing and footwear.
The second-quarter contraction highlights the uneven performance of South Africa’s economy, with consumer spending and selected service industries providing some support while manufacturing, mining and trade came under pressure.
Source: Statistics South Africa / SAnews.gov.za
‘We bring you the latest Garden Route, Hessequa, Karoo news’
