South Africa's Economy Shows Modest Growth Amid Energy Shocks and Rising Unemployment

South Africa's economy grew by 0.5% in the first quarter of 2025, marking a slowdown from the six consecutive quarterly expansions recorded since late 2024. The growth was driven primarily by financial services and agriculture, while household consumption expanded at its slowest rate in two years as consumers reduced spending on travel and discretionary goods. Business investment also declined slightly, signaling caution among private sector actors. The economy faces multiple headwinds: a Middle East energy shock triggered by US-Iran tensions, an interest rate hike implemented earlier in the month, and persistent unemployment near 33%. Economists quoted in the report express concern that near-term economic prospects are deteriorating, with inflation pressures from supply disruptions expected to further erode consumer spending and investment intentions in coming quarters.