South Africa: We're Still Standing - - SA's GDP Contracted, but This Does Not a Recession Make

By Lindsey Schutters

It's easy to feel despondent on the news of 0.2% quarter-on-quarter GDP contraction, but then you miss the 1.4% growth woods for the half-year-one-on-half-year-one trees.

Of course, the spectre of geopolitical escalation from the war in the Middle East (which peaked between April and June 2026) loomed large over the period and triggered global oil price shocks and heightened cost pressures, and elevated business uncertainty. This external instability weighed heavily on business confidence and private sector fixed investment.

But because this was not consecutive quarterly decline, we cannot technically call it a recession. Or be surprised that the contraction was concentrated within specific cyclical production sectors (trade, manufacturing and mining) rather than representing a broad-based structural collapse across all sectors.

The above was the reasoning of Reza Hendrickse, portfolio manager at PPS Investments. He also explained that "from an expenditure perspective, there were some encouraging signs beneath the headline contraction".

"Household consumption expenditure increased by 0.4%, suggesting consumers benefitted from lower inflation and the more favourable interest-rate environment than a year ago..."

It's all about resilience

Despite major drags from supply-side sectors, structural resilience in service industries and consumer demand prevented a deeper contraction.

Consumer spending grew steadily during Q2, driven by essential categories such as food and non-alcoholic beverages. Consumers benefited from lower inflation and a more favourable interest rate climate compared with the...

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