South Africa Q1 Consumption Slows to 0.1% as Investment Falls 1.1%
Updated
Updated · currencynews.co.za · Jun 9
South Africa Q1 Consumption Slows to 0.1% as Investment Falls 1.1%
3 articles · Updated · currencynews.co.za · Jun 9
Summary
Household consumption growth slowed to 0.1% in Q1—its weakest in two years—while fixed capital formation fell 1.1%, signaling a softer domestic economy despite headline GDP growth of 0.5%.
Discretionary spending swung from 2.6% growth to a 1.7% contraction, with restaurants, hotels, food and beverages, and alcohol and tobacco all shrinking as consumers faced rising inflation, higher rates and weaker disposable income.
Business spending on machinery and equipment drove investment lower, subtracting 0.2 percentage points from growth, while economists warned the Middle East conflict's full impact has yet to hit and Q2 could weaken further.
Rate expectations have shifted sharply: the SARB raised its repo rate 25 basis points to 7% in May, and some analysts now see up to two more hikes after oil-driven inflation risks replaced earlier expectations for cuts.
Forecasts for 2026 remain subdued at 1.0%-1.3%, with agriculture's 3.9% expansion and finance's 0.9% growth offering support but manufacturing contracting 0.8% and structural constraints still capping broader momentum.