South Africa's GDP shrank in the second quarter of this year, as the impact of the Iran war ended an 18-month period of growth in Africa's biggest economy. Weakened demand and higher fuel prices, caused by the blockade in the Strait of Hormuz, weighed on the mining, trade, and manufacturing sectors.
The 0.2% contraction marks the end of the steady economic recovery that followed the formation of the coalition government two years ago, prompting Goldman Sachs to revise down its 2026 growth forecast to 1.2% from 1.6%. South Africa's central bank, which raised its main interest rate in May to forestall the war's inflationary impact, is due to hold its latest rate-setting meeting this month. Capital Economics said the bank's tightening cycle is "most definitely over."
The economic slowdown, combined with unemployment hitting a four-year high, has in recent months sparked a resurgence of anti-migrant rhetoric and vigilante violence targeting Africans who were accused of taking jobs and overloading public services. The discontent comes ahead of municipal elections in November.