South Africa’s economy contracts by 0.2% in Q2 2026

South Africa’s economy contracted by 0.2% in the second quarter of 2026, a sharp reversal from the 0.4% growth recorded during the first quarter.

The figures were released by Statistics South Africa (Stats SA) on Tuesday.

The contraction was largely driven by declines in the trade, catering and accommodation sector, which fell by 1.9% and shaved 0.2 of a percentage point off GDP growth.

Stats SA said lower activity was recorded in wholesale and motor trade, as well as food and beverage services.

Manufacturing also declined, falling by 1.8% and contributing a negative 0.2 of a percentage point. Seven of the sector’s 10 divisions recorded negative growth.

The biggest declines were recorded in food and beverages, furniture and other manufacturing, as well as basic iron and steel, non-ferrous metals, metal products and machinery.

Mining and quarrying contracted by 3.0%, reducing GDP growth by a further 0.1 of a percentage point. The main contributors to the decline were platinum group metals, manganese ore, gold and iron ore.

Some sectors recorded modest growth during the quarter.

Finance, real estate and business services increased by 0.3%, adding 0.1 of a percentage point to GDP. Financial intermediation, insurance and pension funding, and other business services were among the main contributors.

Transport, storage and communication grew by 0.9%, also adding 0.1 of a percentage point, with land transport recording increased activity.

General government services rose by 1.0%, contributing another 0.1 of a percentage point, largely due to higher employee compensation at extra-budgetary and higher education institutions, as well as provincial government.

Personal services increased by 0.6%, supported by stronger activity in community services and other producers.

Household spending also edged higher, with household final consumption expenditure increasing by 0.4%. Stats SA said this contributed 0.3 of a percentage point to overall GDP growth.

Spending on food and non-alcoholic beverages rose by 1.2%, while expenditure on other goods and services increased by 0.6%. Recreation and culture rose by 0.8%, while health spending increased by 0.7%.

These gains were partly offset by lower household spending on housing, water, electricity, gas and other fuels, as well as transport, communication, clothing and footwear.

Cape Town takes investment campaign to Johannesburg and Durban

The City of Cape Town has taken its investment proposition to two of South Africa’s key economic centres, using a national roadshow to strengthen partnerships, engage businesses and showcase the opportunities positioning Cape Town as one of Africa’s leading investment destinations.

Alderman James Vos, Mayoral Committee Member for Economic Growth at the City of Cape Town, opened the Johannesburg Stock Exchange (JSE) trading floor on Thursday, 13 August, with the ceremonial sounding of the market’s opening horn. The event marked the Johannesburg leg of the City’s national investment positioning roadshow.

Municipal officials from the Economic Growth Directorate joined representatives from industry bodies and business partners, including Wesgro, GreenCape, CapeBPO, UVU Africa, the Atlantis Special Economic Zone, Cape Town Tourism and other sector-focused organisations supporting investment, trade and economic development.

The programme also marked the launch of the City’s new global investment campaign, Cape Town. Built for Business. The campaign will roll out across multiple channels in more than 60 cities worldwide.

The City also showcased Maya, Invest Cape Town’s new AI-powered investment facilitation tool. Maya is designed to help investors navigate municipal processes and connect with relevant suppliers, partners and officials.

Invest Cape Town, the business and investment brand of the City’s Economic Growth Directorate, hosted business leader engagements in Johannesburg and Durban, bringing together senior representatives from businesses, investors, industry associations, investment promotion agencies and economic development organisations.

“Standing on the JSE trading floor and opening the market is something I will remember. But the real purpose of being here is much bigger. We are here to connect, collaborate and build relationships that can strengthen South Africa’s economic proposition,” said Vos.

“We are not here to compare Cape Town with Johannesburg or Durban. South Africa needs strong economic centres working together. We want to complement what other cities are doing and showcase the sectors and opportunities where Cape Town has a particular competitive advantage.”

These sectors include technology and business process outsourcing, manufacturing, tourism, the blue economy, renewable energy, creative industries and international trade.

The Johannesburg Business Leaders Forum gave the City and its partners an opportunity to engage directly with companies and investors about expansion plans, challenges and opportunities for collaboration.

“We need to get out of our offices and into the boardrooms. We want to hear from businesses about what they need, what is holding them back and where we can work together to unlock investment and jobs,” Vos said.

In Durban, the delegation visited Dube TradePort to learn more about its approach to developing manufacturing, logistics and industrial opportunities around its airport and trade infrastructure.

“We were particularly interested in seeing how Dube TradePort is creating an environment where manufacturing businesses can establish new factories and operations seamlessly,” Vos said.

The Durban programme also included an Invest Cape Town Business Leaders Forum, continuing discussions with businesses and strategic economic partners around investment, collaboration and inclusive growth.

The engagements highlighted the City’s new Manufacturing Support Policy, Business Support Policy and Ease of Doing Business Index, all aimed at making it easier for businesses to operate, grow and invest in Cape Town.

“Cape Town has a very clear proposition: we want to be the easiest place to do business in Africa. That means creating the right conditions for businesses to invest, expand and create jobs, but it also means working with our partners across South Africa.

“Ultimately, when Cape Town attracts investment, creates jobs and grows its economy, it strengthens the South African economy too. That is the message we are taking to the rest of the country and, now, to the world,” Vos said.
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