Bad news about South Africa’s economic growth in 2026

Domestic and global authorities expect South Africa’s GDP growth in 2026 to average 1.2%, marking a marginal improvement from 2025’s average of 1.1%.

South Africa’s current projected growth for 2026 is far lower than projections made at the start of the year, before the outbreak of the US-Iran war.

While the war derailed South Africa’s growth prospects, the country is broadly expected to rebound in the coming years, though escaping its low-growth trap will take some time.

Locally, economic and financial authorities are aligned in predicting that South Africa’s economy will grow by 1.2% in 2026.

The National Treasury updated its forecast to 1.2% in its October Medium-Term Budget Policy Statement, down from 1.6% projected in the February Budget.

Similarly, the Reserve Bank said in its October Monetary Policy Review that South Africa’s growth is forecast to average 1.2% in 2026. 

This is down from 1.4% in January, with the Reserve Bank starting the year optimistic about South Africa’s growth prospects.

In its January Monetary Policy Statement, Reserve Bank Governor Lesetja Kganyago noted that South Africa’s growth looks stable.

He pointed out that the economy had expanded for four consecutive quarters, driven by household consumption. 

“Our forecasts continue to show growth moving somewhat higher, approaching 2% over the medium term. We see some upside risks to these projections,” Kganyago said.

However, this did not last long. In the March Monetary Policy Statement, Kganyago warned that the war in Iran could disrupt South Africa’s growth recovery.

While he maintained that growth would reach 2% in the medium term, Kganyago now said there are downward risks to this outlook.

In May, the Reserve Bank revised its GDP growth projection down to 1.2% and has kept it there since.

However, in the October Monetary Policy Review, the Reserve Bank affirmed that its medium -term outlook is unchanged, with GDP growth expected to rise to 2% by 2029.

The Reserve Bank’s projection is based on the assumption that reforms will progress and structural constraints will ease.

Authority	2026 GDP growth projection
National Treasury	1.2%
South African Reserve Bank	1.2%
International Monetary Fund	1.0%
S&P	1.2%
Moody’s	1.6%
Fitch	1.1%
Average	1.2%

Global GDP projections

Global authorities are broadly in line with the National Treasury and Reserve Bank’s growth projections.

The International Monetary Fund (IMF) provides its projections for South Africa’s economic growth in its biannual World Economic Outlook. It also publishes an update twice a year.

In January 2026, the IMF projected that South Africa’s economy would expand by 1.4% in 2026 and rise by 1.5% in 2027.

In its April report, the IMF significantly lowered these projections, bringing 2026’s to 1% and 2027’s to 1.3%. These remained unchanged in its October report.

The three major global credit rating firms have been more optimistic than the IMF in their projections.

S&P Global confirmed in May 2026 that it expects South Africa’s GDP to grow by 1.2% in 2026 and average 1.7% between 2027 and 2029.

Moody’s is even more optimistic, providing an update on its South African GDP growth projections in May 2026. It expects the domestic economy to expand by 1.6% in 2026.

The firm also said it expects stronger investment and resilient consumption to raise South Africa’s GDP to 2% by 2028, up from an average of 0.8% between 2023 and 2025.

This means the outlier among the top three credit rating agencies is Fitch, which said in October 2026 that it expects South Africa’s growth to average 1.1% in 2026.

While the firm noted improvements in South Africa’s fiscal position, it does not expect growth to reach 2% by 2028. 

Instead, Fitch projects that growth will average 1.4% in 2027 and 1.5% in 2028, driven by reforms in the energy and logistics sectors.

Based on these forecasts, South Africa is set to remain below 2% growth in the medium term. 

Kganyago said in a recent speech that he believes South Africa can escape this low-growth trap, though more work is needed.

“Our low growth trend was mostly caused by domestic factors, and it can be reversed by domestic reforms, many of which are already underway,” he said,

“We expect that the conflict shock will interrupt but not derail the recovery. But we are still not even close to 2% growth, let alone healthy rates above 3%.” 

“This economy is still underperforming relative to its own history and relative to peer countries.”