Spending our way to growth is not enough – IRR

The latest edition of FreeFACTS published by the Institute of Race Relations (IRR) sets out key features of South Africa’s recent growth performance and shows that the country’s 1.1% GDP growth in 2025 was driven more by spending than by the parts of the economy that build lasting growth.

While this was South Africa’s strongest annual growth outcome since 2022, the growth rate remains far too low to make a real difference in the lives of millions of South Africans. Behind the headline figure, the picture remains weak.

Household and broader final consumption supported activity, while fixed investment fell by 2.2% and exports declined by 2.5%. On the production side, agriculture performed strongly, but manufacturing, electricity, gas and water, and construction all contracted, with construction and electricity being among the weakest performers.

Anlu Keeve, Economic Policy Analyst at the IRR, says the performance behind the growth number is deeply worrying.

“The performance of key sectors is worrying because an economy cannot rely on spending alone for sustained growth. Without stronger investment, higher output in productive sectors, and better export performance, growth remains fragile and exposed to outside shocks.”

South Africa cannot defeat unemployment and poverty with weak growth. The economy is stuck, and that has real consequences for real people. The only way out is through much faster growth. But, until South Africa chooses growth over bad policy, unemployment and poverty will remain a feature of life.

Access this edition of FreeFACTS here: https://irr.org.za/reports/freefacts/sa-spending-its-way-to-growth-freefracts-march-2026

Media contact: Anlu Keeve, IRR Economic Policy Analyst and Research Coordinator Tel: 071 929 9516 Email: anlu@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za