South Africa’s economy is expected to grow by only 1.2% in 2026, according to the National Treasury and the South African Reserve Bank. This is a small step up from average growth of 1.1% in 2025, Daily Investor reported.
The forecast is much lower than the ones made at the start of the year. Those earlier forecasts came before the outbreak of the US-Iran war.
“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%,” Reserve Bank Governor Lesetja Kganyago said in a speech.
The National Treasury cut its forecast to 1.2% in its October Medium-Term Budget Policy Statement. In the February Budget, it had expected growth of 1.6%.
The Reserve Bank gave the same 1.2% figure in its October Monetary Policy Review. In January, the bank had forecast growth of 1.4%.
At that time, Kganyago said growth looked stable. He said the economy had grown for four quarters in a row, helped by household spending.
“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 in January.
In the March Monetary Policy Statement, he warned that the war in Iran could disrupt the recovery. He still expected growth to reach 2% in the medium term, but said the risks were now to the downside.
The Reserve Bank lowered its 2026 forecast to 1.2% in May and has kept it there since. In October, the bank said it still expects growth to rise to 2% by 2029.
The bank said this forecast depends on reforms moving ahead and on structural problems in the economy easing.
The International Monetary Fund is less hopeful. In January 2026, it expected South Africa’s economy to grow by 1.4% in 2026 and 1.5% in 2027.
In April, the IMF cut those figures to 1% for 2026 and 1.3% for 2027. It left them unchanged in its October report.
The three big credit rating agencies have been more positive than the IMF. S&P Global said in May 2026 that it expects growth of 1.2% in 2026. It expects an average of 1.7% from 2027 to 2029.
Moody’s expects the economy to grow by 1.6% in 2026. It said stronger investment and steady consumer spending could lift growth to 2% by 2028. Growth averaged 0.8% between 2023 and 2025.
Fitch said in October 2026 that it expects growth to average 1.1% in 2026. The agency said South Africa’s finances had improved, but it does not expect growth to reach 2% by 2028.
Fitch instead expects growth of 1.4% in 2027 and 1.5% in 2028. It said reforms in energy and logistics would drive this growth.
Kganyago said the country can escape its low-growth trap, but 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.
“This economy is still underperforming relative to its own history and relative to peer countries,” Kganyago said.
Source: this article is based on reporting by Daily Investor. Image: Daily Investor. Written with the help of AI and published by the Tzaneen Voice News desk. See our Editorial Standards.
Kgomotso Maake covers news and politics for Tzaneen Voice. Kgomotso reports on government, Parliament, municipalities, courts, crime and service delivery across South Africa, with a close eye on how national decisions reach towns like Tzaneen and the wider Limpopo province. Stories are written in plain English and focus on the facts: who made the decision, what it means, and what happens next.