Economic growth forecast revised for 2026 from 1.6% to 1.2%

Government has revised down its economic growth forecast for 2026 to 1.2% from 1.6% projected in the February budget.

Growth is expected to reach 2% by 2029.

Government says it has identified R38 billion in targeted savings to be redirected to social and economic priorities over the medium term.

The South African Revenue Service (SARS) has also collected an extra R17 billion in additional tax revenue due to higher precious metal prices.

National Treasury says the improved fiscal performance was supported by savings and higher than-expected revenue collections.

SA economy has shown resilience Delivering the Midterm Budget Policy Statement in Parliament Finance Minister Enoch Godongwana noted that the country’s economy has shown resilience despite the spill-over of geopolitical tensions.

“We now forecast real economic growth of 1.2% in 2026, down from the 1.6% projected in February.

Growth is expected to reach 1.6% in 2027, and 2% by 2029.

Despite these headwinds, South Africa has shown resilience.

Fiscal discipline and a lower inflation target are helping to contain borrowing costs and reduce South Africa’s risk premium.

The rand has strengthened and become less volatile.

This reflects the difficult choices we have made to preserve macroeconomic stability and fiscal sustainability.” Government debt is now expected to stabilise at 78.4% of GDP this year which is 0,5% below the February budget projection.

The mini budget also indicates that the budget deficit will narrow to 4.3% of GDP in 2026, from the 4.5% projected earlier this year.

Godongwana elaborates.