2026: A Year of New Risks and a Narrower Margin for Error for South Africa

By Thys Van Zyl, CEO of Everest Advisory Services FSP 49495 – Everest Wealth

2026 could be a year in which South Africa benefits from lower inflation and supportive global conditions, but only if it avoids importing geopolitical risk and delaying reform. The global environment is becoming more tariff-driven, more bloc-oriented and more energy-strategic.

This is in light of Stats SA announcing that CPI increased in December compared with November. The CPI increased by 0.2% month on month in December 2025, pegging the average annual inflation for 2025 at 3.2%, the lowest since 2004.

As we enter 2026, South Africa faces a year where global conditions are becoming more tariff-driven, bloc-oriented, and energy-strategic. The IMF has been clear: stronger medium-term growth depends on structural reform, higher productivity, and the removal of key bottlenecks. The recent move to a lower inflation target of 3% only heightens the importance of credibility and policy coherence.

To navigate this narrower margin for error, five priorities stand out for 2026:

1. Energy security and grid reliability: Energy acts as a multiplier across every sector.
2. Logistics efficiency: Ports, rail, and border delays currently act as a hidden tax on growth.
3. A predictable investment climate: This requires faster approvals, clearer rules, and stronger implementation capacity.
4. Human capital and job absorption: Scaling technical skills and creating pathways into employment is critical.
5. Macro stability: Fiscal discipline must be maintained alongside a credible inflation anchor.

South Africa’s greatest competitive advantage in this context is reliability: in energy, logistics, policy, and institutions. Achieving this requires decisive action; fixing what is broken and allowing the private sector to drive implementation, rather than distractions that add little to growth, confidence, or employment.

This focus on reliability is essential because the global environment is shifting. US policy developments will play a critical role, with tariff escalation under the Trump administration increasingly used as a negotiating tool to rebalance trade and protect domestic industries. While US interest-rate cuts could support global risk appetite and emerging-market currencies, energy geopolitics and renewed focus on Venezuela’s oil sector highlight how energy resources are becoming strategic instruments. Furthermore, recent naval exercises involving China, Russia, and Iran in South African waters underscore a growing perception risk. In a world where tariffs and sanctions are active policy tools, South Africa’s long-standing non-aligned position is increasingly difficult to maintain.

Reflecting on the year prior, the irony of 2025 was that financial markets often performed far better than South Africa’s underlying economic fundamentals suggested. The JSE All Share Index reached new highs, the rand strengthened, and local bonds delivered solid returns, despite stable but well below potential growth. The JSE All-Share Index gained 38.5% in rand terms, closing near 116,000 points and the rand gained over 12% against the dollar according to the Daily Maverick.

The strength of the JSE was largely structural, dominated by companies with offshore earnings, commodity exposure, and financial institutions benefiting from changing interest-rate expectations. However, this equity performance masked a fragile domestic growth story. While a stronger rand helped reduce imported inflation and provided room for interest-rate relief, it also put pressure on exporters, manufacturers, and the tourism sector by eroding price competitiveness. This created a growing divergence between financial markets and the real economy.

Commodity prices, particularly gold, were boosted by geopolitical uncertainty and central-bank buying. While this supported mining profits and fiscal revenues, history shows that commodity cycles are rarely linear. The danger for South Africa lies in mistaking temporary windfalls for permanent gains; when prices retreat, expenditure levels often remain elevated while fiscal gaps reopen.

Looking ahead, the key question is whether the resilience seen in 2025 is sustainable, or whether markets are pricing a late-cycle optimism that leaves South Africa exposed. The country has an opportunity to reap significant benefits; however, it needs to carefully navigate the future for optimal results.

IMPORTANT NOTICE AND DISCLAIMER

General Information
This press release is provided for general information and educational purposes only and does not constitute financial advice, investment research, or a recommendation as defined by the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act). The content reflects the personal views and economic commentary of the author and should not be relied upon as the sole basis for making any investment or financial decisions.

No Personalised Advice
The information contained herein is of a general nature and does not take into account your individual financial circumstances, investment objectives, risk tolerance, or specific needs. Please consult with a licensed financial advisor to obtain personalized advice appropriate to your individual circumstances before making any investment decisions.

Forward-Looking Statements
This document contains forward-looking statements and projections regarding economic conditions, market performance, policy developments, and geopolitical scenarios. These statements are based on current information, analysis, and assumptions which may prove incorrect. Actual outcomes may differ materially from projections or scenarios discussed herein. No guarantee is provided regarding the accuracy of forecasts, and readers should not place undue reliance on forward-looking statements.

Investment Risk Warning
All investments carry risk, including the risk of capital loss. The value of investments and income derived from them may fluctuate due to market conditions, currency movements, economic factors, and geopolitical developments. Past performance is not indicative of future results. Investors may receive back less than the original amount invested.

Past Performance
Any reference to historical market performance, returns, or economic data does not guarantee or predict future investment returns or economic outcomes. Market conditions and economic fundamentals are subject to change without notice.

Information Sources
While reasonable care has been taken to ensure the accuracy of information presented, Everest Wealth Management makes no representations or warranties regarding the completeness, accuracy, or reliability of any information, data, or statements contained in this publication. Readers are encouraged to independently verify information and consult multiple sources.

Author’s Capacity
This document represents the personal views of Thys Van Zyl in his capacity as Chief Executive Officer of Everest Advisory Services, which forms part of the Everest Wealth Management Group and constitutes economic commentary based on publicly available information and professional experience. It does not represent institutional investment research, formal product recommendations, or the solicitation of financial services.

Regulatory Information
Everest Advisory Services (Pty) Ltd is an authorised Financial Services Provider (FSP49495)
Everest Wealth Management (Pty) Ltd is an authorised Financial Services Provider (FSP 795) CAT I, II & IIA and a registered credit provider (NCRCP 21504).

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