SA economy seen expanding to 2% by 2028 as reforms gain traction, says Enoch Godongwana

The National Treasury has struck an optimistic tone on South Africa’s economic prospects, projecting that growth will gradually accelerate by 0.2 percentage points each year over the medium term, reaching 2% by 2028.

 The economy last expanded at roughly 2% or more in 2022, when gross domestic product (GDP) grew by about 2.1% following a strong rebound from the Covid-19 pandemic.

Achieving similar growth levels again could begin to ease the country’s persistently high unemployment rate, which remains above 31%.

Finance Minister Enoch Godongwana on Wednesday said domestic growth outlook is steadily improving while global growth had stabilised on the back of an unprecedented global trade environment characterised by persistent geopolitical tensions and shifting trade policies which are reshaping supply chains.

Godongwana said improved macroeconomic stability, progress on reforms and South Africa’s removal from the Financial Action Task Force grey list have bolstered investor confidence and contributed to a sovereign credit rating upgrade by S&P Global. Consequently, borrowing costs have fallen, supporting the medium-term growth outlook.

"We project real economic growth of 1.6% in 2026, an improvement from the 1.4% stimated in 2025. This improvement reflects the continued strengthening of economic performance from the second half of 2025," Godongwana said during the tabling of the 2026 National Budget Review in Parliament.

"Over the medium term, growth is expected to average 1.8%, reaching 2% by 2028."

Speaking during a pre-Speech media briefing, Deputy Minister of Finance David Masondo said this moderate improvement reflects growing investor confidence, lower interest rates, and declining risk premium, as well as the structural reforms that the government has been undertaking for the last 5 to 6 years.

"And these reforms have made notable progress in stabilizing supply of electricity, freight, rail, and in easing visa applications to boost tourism, as well as attracting skills. And we all know that we've been rolling out far-reaching infrastructure reforms as National Treasury to improve delivery and attract private investment," Masondo said.

"Over the next three years, infrastructure spending by the public sector is expected to total R1 trillion. Although the global economy has shown resilience, trade risks are elevated. In South Africa, we really need to strengthen our domestic drivers of growth by accelerating structural reforms."

This comes as global growth is forecast to stabilise at 3.3% in 2026, similar to the 2025 outcome, with prospects continuing to diverge across regions.

Advanced economies are expected to grow moderately while emerging market and developing economies are expected to continue growing faster than advanced economies, supported by resilient domestic demand in India and a gradual recovery across Sub-Saharan Africa.

China’s growth is expected to moderate as it transitions from investment-led expansion towards a more consumption-driven model – a shift that will influence global trade and commodity demand over the medium term.

However, Godongwana warned that persistent logistics bottlenecks, weak public infrastructure and the recent outbreak of Foot-and-Mouth Disease continue to weigh on domestic economic activity and pose risks to the outlook.

"The structural reforms to lift growth we are implementing alongside this fiscal strategy reflect an understanding that the state should adjust to the needs of the national economy in a flexible way. Operation Vulindela must be understood in this context," he said.

Godongwana also said the economy continues to face structural constraints, including elevated unemployment, transport bottlenecks and infrastructure backlogs. Sustained growth requires faster implementation of reforms especially in energy, water and transport, continued fiscal prudence, and improved public

In light of this, Godongwana said rapid inclusive growth remains the government's only durable path forward. He said efforts to promote faster economic growth continue to revolve around maintaining macroeconomic stability, implementing structural reforms, investing in growth-enhancing infrastructure, and building state capacity.

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