South Africa’s economy contracted in the second quarter of 2026, ending a nearly two-year run of quarterly growth as the impact of the conflict in Iran weighed on economic activity, the country’s statistics agency said on Tuesday.
Gross domestic product fell by 0.2 per cent from the previous quarter on a seasonally adjusted basis, according to Statistics South Africa.
The contraction comes less than two months before local government elections, putting the country’s weak economic performance at the centre of political debate.
Mining recorded the largest decline, contracting by three per cent as production of platinum-group metals, manganese, gold and iron ore fell.
Trade also declined by 1.9 per cent, ending six consecutive quarters of growth, while manufacturing recorded its third straight quarterly contraction.
Seven of the 10 manufacturing divisions reported weaker output during the quarter.
The economic weakness was further compounded by rising imports and a second consecutive quarterly decline in investment. Exports recorded only modest growth, while businesses and public corporations reduced capital spending.
In June, Statistics South Africa warned that the economic fallout from the conflict in the Middle East could weigh on second-quarter activity. The conflict, which erupted in late February, contributed to a sharp rise in fuel prices earlier in the year.
Jobs losses worsen economic pressure
South Africa’s economic challenges were accompanied by significant job losses during the quarter.
The country shed 345,000 jobs in the second quarter, with the community and social services sector accounting for most of the losses.
Unemployment remains above 33 per cent, one of the highest rates globally, adding to pressure on the government to improve economic growth and employment.
The prolonged period of weak economic growth is expected to be a major issue in the November local government elections.
The economic challenges have also deepened dissatisfaction with the ruling African National Congress.
The ANC lost its national majority in 2024 for the first time since the end of apartheid and subsequently entered a coalition government with rival political parties.
The latest economic contraction is therefore likely to add to pressure on the coalition government as political parties campaign ahead of the local elections.