Amid rising unemployment and low consumer spending, leading economists have forecast growth for the South African economy to remain at an anaemic 1.2% in 2026, below National Treasury’s forecast of 1.5% to 1.6%.
The 44 private- and public-sector economists who take part in the BMR/Unisa Economist of the Year Competition make monthly predictions, from February to December, on key annual or fourth-quarter economic indicators.
Their July consensus forecast for GDP growth remained unchanged at 1.2%. They cite volatility in oil prices due to the Middle East conflict, logistics constraints, weak private investment, subdued household spending as well as unemployment at home.
Growth ‘far too low’ to lift unemployment rate
The 1.2% projected growth figure is below the South African Reserve Bank’s July projection of 1.4% growth and remains far too low to make a dent in the country’s high unemployment rate.
Carel van Aardt, project lead for the Economist of the Year Competition, said the country “has been tracking a low growth trajectory for a number of years and the structural reasons for that remain constant”.
He said over 60% of GDP growth is explained by household consumption yet spending remains weak as the number of people employed declined, while unemployment increased, according to the latest Statistics South Africa’s Quarterly Labour Force Survey (QLFS).
According to the second-quarter QLFS, the official unemployment rate rose by 0.9 of a percentage point to 33.6%, with the number of jobless people rising by 345 000 to reach 8.5 million.
The number of employed people fell by 16 000 to 16.7 million.
The economists also project that real household expenditure growth for 2026 will stay unchanged at 1.8%.
Ongoing Middle East tensions
Jacolize Meiring, an adjudicator in the competition, said while the growth forecast is unchanged from the previous month, uncertainty remains – the main source being renewed tensions in the Middle East.
“Economists remain concerned that renewed oil-price pressures could place upward pressure on inflation and reduce the likelihood of further interest rate cuts.”
The conflict has disrupted oil shipments through the Strait of Hormuz, which handles around 20% of the world’s seaborne oil trade, further weighing on global and South African growth prospects.
Economists have however slightly lowered their fourth-quarter Brent crude forecast to $75 a barrel from $77.50.
Some signs of resilience
On the domestic front, in early July Eskom reported more than 400 consecutive days without load shedding, with generation availability improving.
Stronger activity in several service industries and supportive reform momentum suggests a possible improvement in the medium term should global risks and Middle East tensions subside.
Economists project the rand will remain at R16.50 against the dollar in the fourth quarter, citing continued resilience in the local currency.
The prime interest rate is expected to remain unchanged at 10.5% for the fourth quarter.
Meiring said: “Overall, the outlook remains one of cautious resilience, although downside risks continue to outweigh the upside until geopolitical tensions ease.”