ED – this is bne IntelliNews's annual OUTLOOK report for South Africa. We are making forward-looking assessments for major Global Emerging Markets in Emerging Europe, Asia, Latin America, Africa and the Middle East, drawing on insightful reporting from our bureaus around the world.

What is on the agenda? What are the prospects for economic growth, and what problems lie in store in the coming year? The detailed reports cover business, economics, finance, energy, politics and the major sectors of the most important markets.

South Africa enters 2026 with slightly firmer growth momentum, easing inflation and a less acute electricity and logistics crisis, but structural constraints — high unemployment, elevated public debt and complex coalition politics — continue to cap the upside.

The National Treasury projects real GDP growth of about 1.2% in 2025 and 1.5% in 2026, while private-sector forecasts generally cluster higher, in the 1.5–2.0% range, reflecting improved power availability, better mining output and a gradual recovery in services. Growth remains well below potential, constrained by weak productivity, infrastructure bottlenecks and subdued private investment.

Inflation has moderated decisively, falling into the lower half of the South African Reserve Bank’s 3–6% target band, with headline CPI at about 3.6% year on year in October 2025. In response, the SARB cut the repo rate to 6.75% in November 2025, marking the start of a cautious easing cycle. For 2026, inflation is expected to remain anchored around the midpoint of the band, allowing limited further rate cuts, provided currency stability and administered-price pressures are contained.

On the fiscal front, public debt is projected to stabilise at around 77.9% of GDP in 2025/26, before edging slightly lower later in the decade under baseline assumptions of continued consolidation and restrained support for state-owned enterprises. Interest costs remain one of the fastest-growing expenditure items, limiting space for counter-cyclical policy and reinforcing the importance of expenditure control, revenue efficiency and SOE reform.

Electricity supply conditions have improved markedly compared with 2022–23, with fewer and shorter episodes of load shedding as Eskom’s operational performance stabilises and private embedded generation expands. Freight rail, ports and logistics remain a binding constraint, but Transnet’s recovery plan has begun to ease bottlenecks in coal, iron-ore and container corridors. Both energy reliability and logistics reform remain key swing factors for the 2026 outlook.

Politically, the multi-party Government of National Unity (GNU) — formed after the African National Congress (ANC) lost its parliamentary majority for the first time — has reduced near-term instability and reassured markets, but has complicated decision-making and slowed reform execution. Tensions within the coalition over fiscal priorities, SOE restructuring and labour-market reform are likely to persist through 2026, making policy implementation, rather than policy design, the central risk.

Bottom line: South Africa’s 2026 outlook is one of gradual stabilisation rather than acceleration. Improved macro conditions and infrastructure performance provide a firmer base, but unlocking materially higher growth will depend on sustained execution of energy, logistics, fiscal and labour-market reforms within the constraints of coalition governance.

To access the full Outlook 2026 for South Africa click here