PRETORIA - South Africa's economy expanded more than ‌expected in the first quarter of 2026, with output growing in nearly all ​sectors, though the statistics agency said the impact of the Iran war ​was likely to ​show up in the next release.

Gross domestic product (GDP) grew 0.5% quarter-on-quarter on a seasonally adjusted basis in the first ⁠three months of this year, Statistics South Africa data showed.

Economists polled by Reuters had forecast GDP growth of 0.3%, compared to a 0.4% increase in the last quarter of 2025.

Nine of ​the 10 ‌sectors tracked ⁠by Statistics SA ⁠grew in the first quarter, with the finance sector making the largest contribution ​to growth and manufacturing the only one ‌to contract.

Fixed investments declined after two ⁠consecutive quarters of expansion.

Africa's biggest economy started to pick up pace last year and investor sentiment brightened on signs of fiscal discipline, but the Iran war has dampened the near-term outlook.

Stats SA national accounts director Bokang Vumbukani-Lepolesa told a press conference that the decline in fixed capital formation was a worry "because for the economy to grow, we do need to see investments".

Shireen ‌Darmalingam, an economist at Standard Bank, said growth was ⁠expected to slow in the coming quarters ​because of the protracted conflict in the Middle East.

"We continue to expect a moderate improvement in growth to around 2% over the medium ​term, although ‌this trajectory has been disrupted by the conflict," ⁠Darmalingam added.