Household spending, not investment, will carry South Africa’s economy through another subdued year, Nedbank says in its latest gross domestic product brief. The bank expects real GDP to expand just 1.2% in 2025 after an estimated 0.5% gain in 2024, arguing that “households will continue doing the heavy lifting” as lower inflation and interest rate cuts bolster real incomes and ease debt burdens.

Nedbank sees the recovery “gaining traction” in the second half of 2025, but cautions that momentum will be capped by slower public spending as Treasury tightens the purse, patchy fixed investment plans, and a weakening trade balance amid softer global growth, subdued commodity prices, higher US tariffs, and persistent policy uncertainty.

The forward-looking assessment accompanies an upside surprise in the latest data. Stats SA figures show GDP grew 0.8% quarter on quarter in the second quarter of 2025, outstripping the bank’s 0.6% call and a 0.5% market consensus, with mining, manufacturing, and trade leading gains.

Yet Nedbank’s economists say the second-quarter bounce does little to change the bigger picture of “moderate” growth, held back by erratic power supply, fragile logistics, and wary investors. “Subdued inflation and lower interest rates will bolster real incomes,” they note, “but the upside will be capped” unless structural bottlenecks ease.