The South African Federation of Trade Unions (SAFTU) says the latest Gross Domestic Product (GDP) figures released by Statistics South Africa once again confirm that the claims that South Africa has “turned the corner” economically are completely divorced from reality.
Statistics South Africa reports that the economy grew by only 0.4% in the fourth quarter of 2025, following similarly weak growth of 0.3% in the third quarter.
When population growth and inflation are taken into account, this means that South Africans are becoming poorer in real terms.
The working class is getting poorer, while the captains of industry and finance are smiling all the way to the bank as they accumulate even greater wealth.
Even the Festive Season Boom Could Not Lift the Economy
What is particularly alarming is that this weak growth occurred during the fourth quarter, which is normally the most active period for economic activity.
This period typically includes:
• The so-called “Black Friday” retail boom – a concept imported from the United States which SAFTU rejects both for its exploitative consumerism and its troubling historical origins.
• Workers receiving year-end bonuses.
• Massive internal tourism, with migrant workers travelling home across the country.
• A surge of visitors from neighbouring countries travelling to South Africa’s major tourist destinations.
• Increased spending on retail goods, transport, accommodation, food and liquor.
In most economies, this seasonal surge in consumption stimulates manufacturing, retail and services.
Yet even this massive seasonal spending could not significantly lift South Africa’s economic growth.
This points to a deepening structural crisis in the economy.
The Hollowing Out of the Productive Economy
SAFTU has consistently warned that South Africa’s economy is being hollowed out.
Instead of developing domestic productive capacity, the country has increasingly become a wholesale market for imported manufactured goods.
The latest figures confirm this dangerous trend:
• The manufacturing sector declined by 0.6% in the fourth quarter, becoming the largest negative contributor to growth.
• Meanwhile the finance sector grew by 1.4% and was the biggest contributor to GDP growth.
This pattern where finance expands while manufacturing declines, is a classic sign of financialisation and deindustrialisation.
At the same time, productive sectors are being destroyed by the explosion of the illicit economy and dumping, including:
• Up to 75% of cigarettes sold in South Africa now being illicit
• About 18% of liquor produced in the illicit market
• Massive dumping of clothing and other manufactured goods, particularly from Asian economies
Austerity Is Crushing Demand
The crisis is being made worse by the government’s continued austerity policies.
Instead of stimulating the economy, the government is cutting public expenditure and pushing thousands of workers out of public services.
Through its early retirement programme and other austerity measures, government is attempting to drive approximately 30,000 public servants out of the public sector.
At a time when:
• schools are understaffed,
• hospitals are overwhelmed,
• and communities lack basic services,
government is shrinking the state instead of strengthening it.
These policies reduce incomes, weaken demand in the economy, and destroy jobs.
A Society in Deep Crisis
South Africa is already facing one of the most severe social crises in the world.
• 12.4 million people are unemployed.
• Around 80% of the unemployed are in structural unemployment, meaning they have not worked for more than a year.
• According to SALDRU research at the University of Cape Town, 62% of the population lives in poverty.
This means the majority of South Africans lack the purchasing power to sustain economic growth.
Regrettably, the government has been misled by misleading narratives suggesting that poverty is declining, following changes to the measurement baseline by Statistics South Africa. But the lived reality of millions of South Africans tells a different story.
The truth is that poverty and inequality remain entrenched and worsening.
Interest Rate Hikes Could Make Matters Worse
The situation may soon deteriorate further.
Rising oil prices linked to global geopolitical tensions will likely increase inflation in South Africa, pushing up the cost of:
• Transport
• Food
• Electricity
• Basic goods and services
This will give the Monetary Policy Committee of the Reserve Bank an excuse to increase interest rates in order to contain inflation.
Such a move would be devastating.
Higher interest rates will:
• Increase the cost of household debt
• Place enormous pressure on working-class families
• Crush SMMEs and small businesses
• Reduce investment and consumption
• Push the economy into a vicious downward spiral
A Ticking Time Bomb
South Africa is sitting on a social and economic time bomb.
A country where:
• the majority live in poverty,
• millions are unemployed,
• and inequality is among the worst in the world, cannot remain stable indefinitely.
South Africa’s elites are playing with fire.
They are pursuing policies that please corporate tycoons and financial markets, while sacrificing the livelihoods of the poor.
But when the consequences come, those same tycoons will not be able to extinguish the flames they helped ignite.
SAFTU’s Call: Overhaul the Economy to Meet Human Needs
SAFTU reiterates its demand for a complete overhaul of South Africa’s economic model, based on meeting the basic needs of the people rather than the profits of a small elite.
Through its Section 77 campaign, SAFTU has demanded:
• A developmental industrial policy to rebuild manufacturing
• Massive public investment and job creation programmes
• A living wage for all workers
• A universal basic income grant to eliminate poverty
• Strengthening collective bargaining and labour rights
• Transformation of the financial system to support productive investment
• Decisive action against illicit trade, dumping and corruption
• Land redistribution and agrarian transformation
It Is Not Too Late to Change Course
SAFTU’s message to the ANC and the Government of National Unity is simple:
It is not too late to change course.
But repeating the same failed economic policies for more than three decades while expecting different results is not strategy, it is economic insanity.
South Africa must abandon the failed neoliberal path and build an economy that creates jobs, reduces inequality and meets the needs of the people.
The latest GDP figures are another warning that the current trajectory is unsustainable.
A statement was issued on behalf of SAFTU by the General Secretary, Zwelinzima
Vavi.
For media inquiries, contact the National Spokesperson at
Newton Masuku
newtonm@saftu.org.za
0661682157
Media Officer
Asive Dyani
0719019564
