South Africa’s economy is projected to expand by 1.6 per cent in 2026, up from an estimated 1.4 per cent in 2025, according to Finance Minister Enoch Godongwana.
Delivering the 2026 Budget Speech in Parliament in Cape Town on Feb. 25, 2026, the minister said the country’s growth outlook was steadily improving, with medium-term expansion expected to average 1.8 per cent and reach 2 per cent by 2028.
Godongwana cautioned, however, that structural constraints continue to weigh on economic performance. Persistent logistics bottlenecks, fragile public infrastructure and a recent outbreak of foot-and-mouth disease remain significant impediments. He emphasised that inclusive and accelerated growth represents the country’s most sustainable route to long-term stability and shared prosperity.
The minister outlined four strategic pillars underpinning the government’s reform agenda: safeguarding macroeconomic stability, advancing structural reforms, investing in growth-enhancing infrastructure, and strengthening state capacity. On fiscal policy, he described the current moment as a turning point for public finances.
The consolidated budget deficit is projected to narrow to 4 per cent of GDP in 2026/27, while gross debt is expected to stabilise at 78.9 per cent of GDP in 2025/26 before declining over the medium term.
Stronger-than-anticipated revenue collection enabled the withdrawal of 20 billion rand (about 1.26 billion U.S. dollars) in previously proposed tax increases. The budget also introduces a Targeted and Responsible Savings programme, identifying 12 billion rand in savings over the medium term.
Infrastructure investment remains central to the growth strategy, with public-sector spending set to exceed 1 trillion rand, covering transport and logistics, rail modernisation, energy transmission and water systems. Godongwana underscored that fiscal sustainability would bolster economic sovereignty and reduce reliance on external debt amid global uncertainty.