South Africa Q2 GDP tracking: Contraction risk

Research evidence excerpt

South Africa Q2 GDP tracking: Contraction risk

10 July 2026

South Africa EconomicsSouth Africa

Q2 GDP tracking: Contraction risk

◆ Sentiment was hit broadly by the energy shock in Q2 2026… Hugo Pienaar

Economist, CEEMEA

◆ …and activity indicators softened relative to Q1, risking a HSBC Bank plc

hugo.pienaar@hsbc.com

GDP contraction in Q2 +44 20 7718 9563

◆ Beyond Q2, the July fuel price decline and the latest PMI

price indices suggest the energy shock could be unwinding

Q2 survey data show uncertainty from the Middle East conflict led to a broad-based

decline in business and consumer confidence (Consumer strain, 23 June). Along with

subdued ex-auto activity readings, this supports our view that q-o-q GDP likely

contracted in Q2. The latest CEEMEA quarterly (6 July) has our updated forecasts.

The RMB/BER business confidence index (BCI) declined by 8 points to 39 in Q2,

implying that less than 40% of respondents across the five surveyed sectors were

satisfied with the current operating environment. Confidence was largely flat at a

depressed level (31) in manufacturing, where the official stats for April and May

indicate Q2 output could decline by 1-1.5% q-o-q, while it fell in the other four sectors

(chart 3) that comprise the BCI. Retailers are now just as pessimistic as

manufacturers, after real retail sales braked to 2.4% y-o-y in Jan-May 2026, from

3.7% in calendar 2025. Based on the historical correlation between the BCI and

private sector fixed investment (chart 2), the BCI suggests that private capex

remained subdued in Q2 (-4.9% q-o-q in Q1). Confidence in the civil construction

sector was stuck at a muted level of 43 (chart 5), with respondents reporting sharply

weaker activity. This corroborates the sense of curtailed corporate animal spirits in

Q2.