The International Monetary Fund (IMF) has revised upward its economic growth forecast for South Africa, citing improved resilience, easing power constraints and a gradual recovery in business confidence.
In its January Economic Outlook, the Fund projected that Africa’s most industrialised economy expanded by 1.3 per cent in 2025, with growth expected to strengthen slightly to 1.4 per cent in 2026.
Although the growth rate remains modest compared with other emerging markets and the broader Sub-Saharan African region, the latest figures mark a notable improvement from earlier projections and signal a positive trend.
At the beginning of 2025, the IMF had forecast South Africa’s growth at 1.5 per cent, but this was revised sharply downward to 1.0 per cent by mid-year amid concerns over a looming global tariff war led by the United States. By October, as the anticipated impact of the tariffs proved less severe, the projection was adjusted marginally upward to 1.1 per cent.
However, the IMF’s latest outlook at the start of 2026 paints a brighter picture, with the growth estimate now lifted to 1.3 per cent. This aligns with the World Bank’s forecast, which also places South Africa’s 2025 growth at 1.3 per cent.
The improved outlook is underpinned by a more reliable electricity supply, a strong agricultural harvest and rising business confidence towards the end of the year.
Analysts note that the easing of load shedding has been particularly critical. In 2024, the IMF slashed its growth projection for South Africa from 1.8 per cent to 0.5 per cent due largely to persistent power outages. The economy eventually grew by 0.6 per cent that year, making the projected 1.3 per cent expansion in 2025 more than double the previous year’s performance.
Looking ahead, both the IMF and the World Bank expect growth to edge up to 1.4 per cent in 2026 and 1.5 per cent in 2027.
Nonetheless, the Bretton Woods institutions caution that sustaining this momentum will depend on continued reforms in the electricity sector, infrastructure and logistics, as well as broader efforts to create a more business-friendly environment.
For 2026, private consumption and increased private-sector investment are expected to remain the key drivers of economic growth.
