In commenting on the GDP figures for the second quarter of 2026, Prof. Raymond Parsons, economist from the North-West University (NWU) Business School, says after opening the year on a positive note with 0,4% GDP growth in the first quarter, the setback in the subsequent growth performance of South Africa reflects the strong pressure it faced in recent months from severe global headwinds on the twin growth and inflation fronts.

“The prospect at the beginning of 2026 that the economy would immediately build on the incipient recovery seen in the second half of 2025 has unfortunately not been realised. In the latest GDP figures, while finance, business services and transport still appear to be leading sectors, mining and manufacturing are for now the lagging ones in the growth outlook.”

According to Prof. Parsons, gross fixed capital formation, which is necessary for sustained job-rich growth, has also disappointed. “While high-frequency economic data in the third quarter are still mixed, the evidence points to an economy in which recovery has been interrupted and delayed, rather than definitively derailed.”

Prof. Parsons says household spending appears stable. He explains that a plausible central forecast is now about 1,2% real GDP growth in 2026, but that is lower than the broad consensus of about 1,6% growth anticipated earlier in the year.

“Better growth prospects remain vulnerable to renewed Middle East escalation, weak fixed investment, borrowing costs and policy uncertainty. Domestic policy must therefore still act to mobilise available tailwinds and reinforce a resumed economic momentum.”

Prof. Parsons says changed economic circumstances this year now also have important implications for the meeting of the Monetary Policy Committee of the South African Reserve Bank on 23 September, as well as the key policy choices in the Medium-Term Budget Policy Statement due on 21 October 21.

Prof. Raymond Parsons