“The National Treasury’s 2026 Budget Review projects GDP growth of 1.6% in 2026, supported by reforms in energy, transport, and water. Investor confidence has risen following South Africa’s removal from the FATF grey list.”
South Africa’s economic outlook for 2026 reflects cautious optimism, with the National Treasury forecasting real GDP growth of 1.6%, up from 1.4% in 2025. This momentum is expected to continue, reaching 2% by 2028, underpinned by structural reforms, fiscal prudence, and improved investor confidence. The government’s commitment to stabilizing debt and lowering inflation targets has bolstered credibility, leading to a sovereign credit rating upgrade.
Key reforms under Operation Vulindlela include restructuring Eskom, enabling private participation in rail and ports, and establishing water management agencies. These measures aim to unlock investment, reduce bottlenecks, and create jobs. However, challenges remain: unemployment is high, infrastructure backlogs persist, and manufacturing lags behind services.
The Treasury emphasizes that macroeconomic stability is the foundation for growth. Lower inflation, now targeted at 3%, is expected to support household incomes and reduce borrowing costs. Fiscal discipline, combined with efficient public spending, will be critical to sustaining this trajectory.
South Africa’s growth strategy rests on four pillars: maintaining stability, implementing reforms, boosting state capability, and raising infrastructure investment. If fully realized, these reforms could raise long-term growth by 2.3 percentage points over the next decade.
