GDP grows in Q1, but little hope for growth in Q2

South Africa’s real gross domestic product (GDP) delivered good news for the first quarter of 2026, as it increased by 0.5%, marking a sixth consecutive quarter of growth. But analysts are not very optimistic about the second quarter due to the impact of the conflict in the Middle East. Statistics South Africa (Stats SA) said finance, agriculture, trade, and transport did the heavy lifting on the production (supply) side of the economy.

The expenditure (demand) side was supported by a decline in imports and a rise in household consumption, government consumption and exports. Thestatsreleased on Tuesday showed that the finance industry was the main positive contributor on the production side of the economy, expanding by 0.9% and adding 0.2 percentage points to GDP growth. Agriculture, trade, and transport & communication also made notable contributions Dr Bonke Dumisa, an independent economic analyst, toldThe Citizenthe 0.5% growth in the first quarter is encouraging.

“It is encouraging that this improvement is in line with the sentiments expressed by the three international credit rating agencies, which said the economic outlook in South Africa is stable to positive,” he said. He noted that manufacturing was the only sector that contributed negatively. However, Dumisa still found it encouraging that the growth happened despite some challenging global factors.

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Dumisa said the Middle East conflict started in late February, and the GDP figures for the period were not negatively affected. Stats SA said the impact of the Middle East conflict will only be reflected in the second-quarter GDP estimates in September 2026. “The conflict in the Middle East began towards the end of February, more than halfway through the first quarter.

The impact of the conflict was felt in the sharp fuel price increases in April, which may reflect in the second-quarter GDP estimates,” said Stats SA. Shireen Darmalingam, Standard Bank economist, said the country’s economic growth overshot expectations in the first quarter. “The first-quarter data, which largely predates the escalation of the Iran conflict and the associated oil price spike, showed relative resilience,” she said.

“Performance in some sectors was supported by idiosyncratic factors; notably, growth in the agricultural sector benefited from favourable weather during the quarter. The manufacturing sector faced headwinds in Q1 and was the only sector to have subtracted from growth.”

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