By Following two quarters of strong activity, growth is projected to reach 1.3 and 1.4 percent in 2025-26, driven by continued robust private consumption.
South Africa is one of the emerging economies in the globe and the first to host and chair the G20 on the African continent. Following many repulsive challenges towards investment including load-shedding, the economy is beginning to show some green shoots.
The International Monetary Fund (IMF) visited South Africa from 1 to 8 December 2025, led by Delia Velculescu where it met its economic authorities, industry leaders and their counterparts in the public sector. The meeting discussed policies to ensure macroeconomic stability and the structural reforms needed to durably lift potential growth, create jobs, and reduce poverty and inequality.
The country has also been on the receiving end of America’s protectionism assault on the globe. South Africa has not enjoyed an easy ride this year with a number of multi-national companies exiting the market and with some partially de-investing.
According to the IMF, South Africa being faced with greater protectionism, tariffs, and heightened policy uncertainty, its economy has shown resilience, owing to its abundant mineral wealth, independent institutions, credible inflation-targeting framework, flexible exchange-rate regime, and deep domestic capital markets.
The IMF says financial-market indicators have improved, in part reflecting important domestic policy developments, such as the shift to a lower inflation target and exit from the FATF grey list, which, together with the recent Medium-Term Budget Statement’s reaffirmation of the government’s commitment to debt stabilization, led to an upgrade of South Africa’s credit rating.
“Nonetheless, persistent impediments—including product- and labour-market rigidities, spatial disparities, governance weaknesses, inadequate infrastructure, and elevated public debt—constrain the economy’s ability to rebound strongly from shocks, create needed jobs, and achieve its true growth potential,” said the IMF.
Stats SA recently reported that the economy of the country has expanded by 0.5% in the third quarter, with mining making the largest contribution towards real gross domestic product. In its assessment, the IMF said economic activity in the country has grown and is expected to grow further.
“Following two quarters of strong activity, growth is projected to reach 1.3 and 1.4 percent in 2025-26, driven by continued robust private consumption. While exports remain hampered by tariffs and continued global trade policy uncertainty, strong commodity prices are supporting export receipts in the near term. On-going electricity and logistics reforms are expected to boost investment over the medium run, with growth projected to reach 1.8 percent by the end of the decade. In view of the move to a new lower inflation target, inflation is projected to average 3.3 and 3.6 percent in 2025 and 2026, before settling to 3 percent by end-2027 and beyond,” said the IMF.
According to the Fund, weaker-than-expected global activity—in the context of heightened geopolitical tensions, escalating trade measures, and prolonged global policy uncertainty; could dampen exports and increase commodity-price volatility.
An abrupt global financial market correction and tighter financial conditions could lead to exchange-rate and capital-flow volatility and higher sovereign bond yields. On the domestic side, higher costs of disinflation may impact activity in the near term, while a slower pace of structural-reform implementation may exacerbate supply-side constraints and weigh on medium-term growth.
On the upside, more ambitious domestic reforms, combined with a de-escalation of tariffs and improved global demand, could help boost confidence and support investment and growth.
