Will 2026 be the game changer for SA’s economy?

FOR THE first time in many years, there is credible reason to believe that South Africa has entered a new year with renewed hope and optimism, both economically and politically.

At the start of 2025, the outlook appeared far more uncertain. The newly formed national coalition seemed fragile, a national budget had yet to be debated let alone passed and there was persistent public speculation that factions within the ANC might force President Cyril Ramaphosa from office.

Although load shedding had receded, there was little confidence that it would not return.

Globally, further uncertainty loomed as US President Donald Trump prepared to implement tariffs that many feared would have a severe knock-on effect on SouthAfrica’s economy.

Yet, despite these gathering dark clouds, South Africa has entered 2026 (albeit just one month) thus far as a more stable and resilient economy.

Golden nuggets

Gold has surged by more than 80% over the past 12 months and is currently trading in the US$5 000– $5200 range (as at January 30, 2026), bringing substantial foreign earnings into the country. Other precious metals like silver have followed suit, injecting further momentum into the mining sector.

The rand has reflected this renewed confidence, trading within the R15.80 - R16.00 range against the US dollar currently-its strongest level since mid-2022.

The Rand’s appreciation against all major global currencies has been supported by higher commodity prices, improved fiscal and monetary policy credibility, and a lower inflation target, all of which underpin stronger growth prospects.

Equity markets have also surged. The Johannesburg Securities Exchange (JSE) is up approximately 30% since January 2025, driven not only by mining stocks but by broad-based gains across most listed companies.

Our inflation rate in December 2025 was 3.6% edging closer to the South African Reserve Bank’s revised 3% target and strengthening the case for an interest rate cut in March.

Political stability and increased investment in critical infrastructure continue to reinforce this positive outlook. Economic growth, while still modest, is improving.

The economy expanded by 0.5% in the third quarter of 2025,with nine of the ten sectors tracked by Statistics South Africa recording higher output.

On a year-on-year basis,GDP grew by 2.1%, exceeding market expectations. National Treasury projects growth of 1.2% in 2025 and1.5% in 2026 - a small but meaningful step forward for an economy that has averaged less than 1% growth overthe past decade.

The unemployment crisis

Despite these gains, South Africa’s single greatest threat remains unemployment, which stands at a staggering32%. If this challenge can be addressed, many of the country’s other social and economic pressures will begin to ease.

The coming budget must clearly outline targeted interventions that make a tangible difference to workers in mines, smelters, factories, and farms.

Priority should be given to strengthening frontline public services, ensuring they are properly staffed and equipped to deliver the quality services on which working-class communities and economic activity depend.Local government, arguably the state’s Achilles’ heel requires urgent and sustained intervention. Municipal failure, visible in deteriorating infrastructure and basic service delivery, undermines investor confidence and everyday economic life.

The government, Eskom, and municipal employees deserve recognition for their role in ending load shedding.However, Eskom’s financial sustainability remains unresolved, particularly municipal debt and losses arising from wasteful expenditure, corruption, vandalism, and cable theft. Equally critical is continued support for Transnet and Metrorail.

Improvements at ports - especially Durban and along freight and passenger rail corridors are encouraging, but far more work remains. A modern, efficient Transnet unlocks thousands of jobs across mining, manufacturing, and agriculture.

A reliable Metrorail provides affordable transport for millions of workers while easing congestion in urban centres. Mining, long the backbone of the economy, remains a key driver of employment and revenue. Its current growth trajectory must be sustained into 2026 and beyond.

Political stability

Politically, the national coalition appears stronger now than at any point since its formation. Coalition partners seem to recognise that tangible progress is being made, and President Ramaphosa’s position has visibly strengthened.

His leadership during the G20 gathering, coupled with the Trump administration’s decision to boycott the event, provided further momentum. While local government elections later this year will test coalition cohesion, thereare signs that parties have found mechanisms to manage tensions, even on contested policy issues.

From hope to action

2026 must be a year of decisive action - one in which the state is fixed, economic growth accelerates, and unemployment finally begins to fall.

This will take bold and disciplined leadership coupled with relentless execution.

Dr Ridwaan Asmal is the Manager of the School of Accounting, Finance and Tax at Mancosa.

** The views expressed do not necessarily reflect the views of IOL or Independent Media. 

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