Investec forecasts positive economic growth for South Africa in 2026

South Africa’s economic outlook is improving, with Investec chief economist Annabel Bishop forecasting faster growth next year as freight constraints ease and exports strengthen.

“For 2026, the IMF sees South Africa’s economic growth rate at 1.2% year-on-year, which is below our forecast of 1.5% year-on-year, as we continue to anticipate alleviations in the domestic freight crisis, driving faster export-led economic growth domestically,” Bishop said.

Experts have warned that South Africa risks a multiplier effect on export volumes to the US, given that the recently imposed 30% tariff is higher than that of rival exporters, making local products less competitive in the American market.

Donald MacKay, CEO of XA Global Trade Advisors, has said tariffs already in place – and those expected – affect about 1.3% of South Africa’s gross domestic product.

South Africa didn’t sign a trade deal with the US as of the effective date of tariffs, being August 7.

The local economy only grew 0.8% in the second quarter of the year.

Domestically, South Africa’s data releases for the first half and third quarter of 2025 “are supportive” of 1% gross domestic product growth, said Bishop, which is in line with IMF’s figures.

The International Monetary Fund’s October World Economic Outlook (WEO) reflected a more optimistic global picture.

Yet, South Africa lags emerging market and developing economies, which are projected to moderate to just above 4%, said the IMF.

“Overall, the IMF has lifted its economic forecasts for 2025, by 0.1 percentage points year-on-year for both emerging and advanced economies, compared to its forecasts made at its July WEO publication, and by more substantially since April,” Bishop noted.

Economists view growth of around 5% as required for sustainable job creation.

Bishop noted said the IMF’s forecast for world output growth this year had risen to “3.2%, a 0.2 percentage point lift from its July forecast, and 0.4%. The IMF’s global growth forecast for 2026 remained steady at 3.1%.

The IMF also revised US growth higher to 2% this year, accelerating to 2.1% next year.

Bishop said, “the US’s numerous delays in implementing its universal tariffs have had a positive impact benefiting countries’ growth expectations for this year somewhat on the whole,” adding that “most of South Africa’s exports to the US have avoided this tax for most of the year”.

Agriculture is a key push driver for economic growth, said Bishop. “The ample field crop harvests this year has bolstered agriculture production substantially,” she said.

Get your news on the go. Download the latest IOL App for Android and IOS now.

Consumer spending is also picking up, with “a modest uplift, of 0.7% for the first two thirds of the third quarter of 2025… and a 1.7% lift … for real motor vehicle sales.”

Bishop said risks remained from “more severe protectionism from the US,” but Investec expects 2026 to bring stronger, export-led growth as local and global conditions improve.

Yet, Bishop noted that “concerns over US, and global, growth later this year, and next, have had an impact on manufacturing production and sentiment, resulting in a suppressing effect on commodities’ prices excluding precious metals”.