Johannesburg: South Africa’s economy has endured a turbulent journey since the onset of COVID-19, grappling with disrupted supply chains, rising unemployment, and widening inequality. The pandemic exposed structural vulnerabilities and compounded long-standing challenges, from energy insecurity to limited access to digital infrastructure.
Yet, amid these struggles, significant progress has been made. Bold reforms, targeted investment, and collaborative efforts across public and private sectors have begun to stabilise key industries, reignite growth, and restore confidence. Today, there is renewed hope that the country has turned a corner, with early signs of resilience and recovery emerging across multiple sectors. However, this optimism must be tempered by the realities of global geopolitical tensions, which continue to shape markets, trade flows, and investor sentiment.
As South Africa positions itself for a more inclusive and sustainable future, the ability to navigate these external pressures will be decisive in securing long-term prosperity.
Golden Nuggets
Dr Ridwaan Asmal: School Manager of MANCOSA’s School of Accounting, Finance & Tax, pointed out that the price of gold, a longtime cornerstone of our economy, has surged by more than 60% over the past year and is currently trading in the US$4 400 to $4 700 range per ounce (correct as at (19/01/26, gold price $4 662 per ounce), bringing substantial foreign earnings into the country. Other precious metals have followed suit, injecting further momentum into the mining sector. “The Rand has reflected this renewed confidence, trading within the R16.40–R16.60 range against the US dollar since the start of 2026, its strongest level since mid-2022. Over the past 12 months, the currency has appreciated by more than 10%, supported by higher commodity prices, improved fiscal and monetary policy credibility, and a lower inflation target, all of which underpin stronger growth prospects,” says Dr Asmal.
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.
Encouragingly, inflation softened to 3.5% in November, edging closer to the South African Reserve Bank’s revised 3% target and strengthening the case for an imminent interest rate cut. 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 and 1.5% in 2026 – a small but meaningful step forward for an economy that has averaged less than 1% growth over the past decade,” says Dr Asmal.
Beyond headline indicators, investor sentiment has also improved markedly, with foreign direct investment flows rising in tandem with stronger commodity earnings. Confidence in South Africa’s fiscal trajectory has been reinforced by disciplined expenditure management and ongoing reforms in state-owned enterprises, which together signal a more sustainable outlook. The banking sector has reported healthier balance sheets, supported by lower credit impairments and renewed lending activity, while consumer confidence surveys point to cautious optimism among households.
“Importantly, infrastructure investment in energy and transport is beginning to unlock bottlenecks that have long constrained growth. These developments, though incremental, suggest that the foundations for a more resilient economy are being laid, positioning South Africa to better withstand external shocks in 2026,” says Dr Asmal.
The Unemployment Crisis
Despite these gains, South Africa’s single most significant threat remains unemployment, which stands at a staggering 32%. 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,” said Dr Asmal.
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 regarding municipal debt and losses 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,” says Dr Asmal, adding that mining, a longtime backbone of the economy, remains a key driver of employment and revenue. Its current growth trajectory must be sustained into 2026 and beyond.
Addressing unemployment requires a multi-pronged strategy that combines immediate relief with long-term structural reform. Expanding vocational training and apprenticeships in high-demand sectors such as renewable energy, logistics, and digital technology can equip workers with skills aligned to future growth industries. Incentivising small and medium-sized enterprises through tax breaks and access to affordable finance will stimulate job creation at scale, while targeted public works programmes can absorb labour in infrastructure, housing, and community services. Strengthening partnerships between government, business, and labour is essential to ensure interventions are coordinated and sustainable. Above all, tackling unemployment requires political will and sustained implementation; without it, South Africa risks entrenching inequality and missing the opportunity to convert economic momentum into inclusive prosperity.
Political Stability
Politically, the national coalition appears stronger now than at any point since its formation. Coalition partners 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, there are signs that parties have found mechanisms to manage tensions, even on contested policy issues.
“South Africa’s renewed political confidence must now extend to its international relationships. By prioritising dialogue, transparency, and pragmatic negotiation across the globe, South Africa can rebuild trust and position itself as a reliable partner on the global stage. Strengthening this relationship will reinforce domestic stability while ensuring that external pressures do not derail the country’s fragile economic recovery,” says Dr Asmal.
From hope to action
Last year delivered promising green shoots. But 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 require bold, disciplined leadership coupled with relentless execution.
Decisive action must translate into measurable outcomes that restore confidence across society. This means tackling inefficiencies in public administration, accelerating infrastructure delivery, and ensuring reforms translate into visible change. Fiscal discipline must be matched by innovation in service delivery, with technology leveraged to improve transparency and accountability. At the same time, partnerships with business and labour should be deepened to unlock investment and create jobs at scale.
South Africa cannot afford another year of incremental progress; the urgency of the moment demands bold choices, clear priorities, and unwavering commitment. If leadership rises to the occasion, 2026 can mark the beginning of a new era defined by resilience, inclusivity, and sustainable growth.
Boilerplate and Editor’s Notes.
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