Amanze Chinonye
South Africa’s foreign direct investment (FDI) inflows surged 145% in the second quarter, providing a stronger source of external capital even as the economy contracted during the period, central bank data showed on Tuesday.
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FDI rose to 49.8 billion rand ($3.03 billion) in the April-June quarter from 20.3 billion rand in the first three months of the year, an increase of 29.5 billion rand, according to the South African Reserve Bank.
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The increase came against a weaker domestic growth backdrop. South Africa’s economy contracted 0.2% in the second quarter after expanding 0.4% in the previous quarter, with mining, trade and manufacturing among the sectors that weighed on activity, Statistics South Africa data showed.
The country’s external position also weakened during the quarter. The current account swung to a deficit equivalent to 2.6% of gross domestic product, from a surplus of 2.3% in the first quarter, according to the central bank.
The investment figures come as policymakers seek to support growth while containing renewed inflationary pressures. The Reserve Bank raised its benchmark interest rate by 25 basis points to 7.25% on Sept. 23 and lowered its 2026 growth forecast to 1.2%.
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The stronger FDI inflows provide additional foreign capital for investment in the economy, although the quarterly increase alone offers limited evidence about the broader direction of investor sentiment.
The significance of the inflows will depend partly on the sectors receiving the funds and whether they represent new productive investment or transactions involving existing assets.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
