Treasury cuts South Africa's 2026 growth forecast to 1.2%
The National Treasury lowered its 2026 growth forecast from 1.6% in February, in the medium-term budget policy statement tabled in parliament on Wednesday. Treasury said the economy has stayed resilient despite the Middle East conflict, but called 1.2% growth far too low for large-scale job creation.
Treasury also cut its 2027 forecast to 1.6% from 1.8% in February. It expects growth of 2% by 2029. The International Monetary Fund (IMF) cut its own 2026 forecast for South Africa to 1%, from 1.4% at the start of the year.
Finance Minister Enoch Godongwana wrote in his foreword that structural reforms in energy, rail and tourism are removing barriers to growth. He said more competitive electricity and transport sectors will help cut costs for households and businesses over time.
Treasury estimates average inflation of 4.4% in 2026. Private-sector investment fell by 1.1% in the first half of 2026 compared with the same period in 2025. Public investment rose by 5.2% over the same period.
Treasury said risks to the outlook are tilted to the downside. In its worst-case scenario, oil rises above $100 per barrel in early 2027, and average growth from 2026 to 2029 is 1.5%. Under a reform scenario, real growth reaches 2.3% by the end of the medium term.
Key facts
- Who
- Enoch Godongwana (finance minister); National Treasury (government department presenting the medium-term budget policy statement); IMF (international lender that revised its South African forecast)
- What
- The Treasury lowered its 2026 GDP growth forecast to 1.2% from 1.6%, while saying the economy has shown resilience to the Middle East conflict. Growth forecasts for 2027 and 2029 were also revised, and the IMF has cut its own 2026 forecast for South Africa to 1%.
- When
- 21 October 2026
- Where
- South Africa, Middle East
- Status
- Reported