Economists cut SA growth in April and raised their inflation forecasts due to the Middle East conflict.
The latest results from the Bureau of Market Research (BMR)/Unisa Economist of the Year (EoY) competition point to a more uncertain and fragile economic outlook for both South Africa and the global economy.
The cut was the second consecutive downgrade. The April consensus forecast for 2026 economic growth is 1.3% from 1.5% in March and 1.6% in February. This is substantially above the International Monetary Fund (IMF) forecast of 1.0%. The IMF cut its forecast from 1.4% made in January.
This followed growth of 1.4% in 2025 after a 0.4% gain in 2024. This is measured from the expenditure side. This measure is what most economists, including the National Treasury, use when making their forecasts.
The BMR/Unisa Economist of the Year Competition brings together leading economists to provide independent forecasts on key economic indicators. A total of 43 economists are participating in the 2026 competition.
Differing Views
While there is broad agreement by the participating economists on the overall direction of the economy, differences remain regarding the impact of higher inflation on household consumption and the fixed investment outlook.
Participants emphasised that the economic outlook remains highly dependent on how geopolitical tensions evolve in the coming months.
Even if such tensions subside in the short term, their direct, indirect and induced effects are expected to continue filtering through the global economy for some time.
Downside risks
Downside risks to the outlook now appear more prominent than upside surprises.
Most economists expect the South African Reserve Bank to increase the repo rate on 28 May. This will be in response to higher inflation.
According to Statistics South Africa, consumer inflation rose to 4.0% year-on-year in April from 3.1% in March and 3.0% in February. The average increase for the first four months was 3.4%.
The consensus forecast for the average inflation rate in 2026 has also increased. It is now 3.9% from 3.6% in March and 3.4% in February.
Household consumption
Some economists expect household finances to strengthen, supporting real household consumption expenditure growth above 2%. Others remain cautious, citing high unemployment, tight credit conditions and ongoing political and policy uncertainty.
The South African Reserve Bank reported that the ratio of net wealth to disposable income increased to 425% in 2025 from 398% in 2024. As South Africans grew richer in 2025, so they could spend more. Therefore, real household final consumption expenditure increased by 3.6% in 2025 from only a 1.0% gain in 2024.
Fixed investment
Views on fixed investment also differ. More optimistic forecasts assume gradual progress in structural reforms in transport, water and energy, alongside improved private-sector participation and enhanced confidence.
This is reflected in the boom in solar generation. The National Energy Regulator of South Africa (NERSA) registered 112 generation facilities in the first quarter 2026. These have a combined capacity of 1 327 MW at an estimated investment value of R28.2 billion.
In March the National Treasury launched a R54 billion performance-based grant. The aim is to increase investments in water, sanitation, electricity and waste infrastructure services by the country’s eight metropolitan municipalities, or metros.
More cautious perspectives highlight risks associated with policy direction, governance concerns, biosecurity challenges in agriculture, and uncertainty linked to domestic political developments, including the local government elections. This is reflected in the fact that economists cut SA growth forecasts.
“While there are encouraging signs of structural improvement locally, elevated oil prices, inflation risks and weaker global growth are expected to continue constraining economic recovery during 2026,” Jacolize Meiring, member of the EoY Adjudication Committee, said.
