South Africa’s economy contracted by 0.2% in the second quarter of 2026, marking its first quarterly decline in almost two years, according to official data released on Tuesday. The result was slightly worse than the 0.1% contraction economists had expected.
The decline was driven mainly by poor performance in several key sectors. Mining output fell by 3.0%, manufacturing declined by 1.8%, while trade contracted by 1.9%. These sectors outweighed growth recorded in other parts of the economy.
Iran war adds pressure
Economists said the economic impact of the conflict involving Iran and Israel also contributed to the weakness. Higher fuel prices and disruptions affecting shipping through the Strait of Hormuz increased costs and put pressure on domestic demand.
Household spending remained positive during the quarter, but investment continued to weaken. This has raised concerns about whether South Africa can achieve stronger growth for the rest of 2026.
Some sectors still recorded growth
Despite the overall contraction, not every part of the economy performed poorly. Agriculture continued its expansion, while transport and communication and construction also recorded growth. Household consumption increased by 0.4%, providing some support to the economy.
Economists said the contraction does not necessarily mean that South Africa’s recovery has ended permanently. However, the latest figures highlight the country’s continuing challenges in generating stronger economic growth, investment and employment.
The performance of the economy in the third quarter will be closely watched to determine whether the current slowdown is temporary or signals a more prolonged period of weakness.
