South Africa’s Economy Shows Resilience, but Inflation and Jobs Remain Key Concerns
South Africa’s economic outlook remains cautiously stable, with leading economists expecting modest growth in 2026 despite continued global uncertainty and domestic structural pressures. According to the latest BMR/Unisa Economist of the Year Competition forecasts, real GDP growth for 2026 is expected to remain at 1.2%, unchanged from June. Most of the ten key economic indicators also remained stable in July, suggesting that economists still see the economy as resilient, but lacking the momentum needed for stronger, job-rich growth.
Inflation edges higher, while employment outlook softens
The July forecasts show only a few notable changes compared with June. Consumer inflation increased slightly from 4.1% to 4.2%, while expected employment growth declined from 0.7% to 0.6%.
There were some more encouraging shifts. Brent crude oil price expectations eased from US$77.50 to US$75.00 per barrel, while the expected long-term government bond yield declined marginally from 8.63% to 8.60%. Forecasts for GDP growth, household spending, the rand/dollar exchange rate, the prime lending rate, the current account balance and global growth remained unchanged.
What do the latest economic indicators tell us?
Recent official data broadly support this picture of modest resilience. South Africa’s economy grew by 0.5% quarter-on-quarter in the first quarter of 2026, marking the sixth consecutive quarterly expansion. Finance, agriculture, trade and transport were among the main contributors to growth, while manufacturing contracted.
Inflation, however, remains a concern. Headline CPI increased to 5.0% year-on-year in June, largely because of higher fuel and transport costs. At the same time, the labour market remains under pressure, with the unemployment rate rising to 32.7% in the first quarter. There are nevertheless positive developments. Improved electricity availability, including more than 400 consecutive days without load-shedding by early July, has provided welcome support to businesses and households.
Global uncertainty remains a major risk
Geopolitical developments, particularly renewed tensions in the Middle East, remain one of the biggest risks to the outlook. Economists continue to watch the possible impact on global oil prices, supply chains, inflation and economic growth.
At home, weak private investment, logistics constraints and subdued job creation continue to limit stronger economic expansion. On the positive side, a resilient rand, improved electricity supply and stronger activity in parts of the services sector provide some support. The overall picture can therefore best be described as one of cautious resilience: South Africa continues to grow, but remains exposed to both international shocks and domestic structural weaknesses.
Expert insight
Ms Jacolize Meiring, an adjudicator of the BMR/Unisa Economist of the Year Competition, noted that renewed tensions in the Middle East remain a major source of uncertainty.
She highlighted the risk that higher oil prices could increase inflationary pressures and reduce the likelihood of further interest rate cuts. At the same time, South Africa has shown resilience through a relatively stable political environment, a resilient rand and improved electricity availability.
Professor Carel van Aardt, Project Lead of the BMR/Unisa Economist of the Year Competition, emphasised the broader value of economic forecasting.
“Economic forecasting is not simply about predicting future outcomes; it provides businesses, policymakers, investors and households with an informed view of the risks and opportunities shaping the economy.” He added that the competition provides an independent monthly benchmark of expert opinion that supports evidence-based decision-making and informed public debate.
Why the BMR/Unisa Economist of the Year Competition matters
The BMR/Unisa Economist of the Year Competition does more than recognise forecasting excellence. It provides a valuable monthly snapshot of how leading economists see South Africa’s economic future evolving.
By tracking ten key macroeconomic indicators and combining quantitative forecasts with expert insight, the competition helps businesses, policymakers, researchers, investors and the public better understand the risks and opportunities facing the economy. In an environment where economic conditions can change quickly, this independent benchmark offers a useful way to follow changing expectations and make more informed decisions.
