Real Gross Domestic Product (GDP) growth in South Africa improved modestly to 1.1% in 2025, up from 0.5% in 2024, thanks to recovery in agriculture and horticulture, expansion in finance, real estate and business services, trade, catering, and accommodation.

GDP growth is projected to remain subdued at 1.2% in 2026 due to increased global risks and supply the impact of shock on energy and food prices because of the Middle East conflict. Domestic risks include persistent infrastructure deficits, ongoing electricity and water supply problems, inefficiencies in freight rail and port operations, local government governance failures, and fiscal vulnerabilities stemming from state-owned enterprise (SOE) bailouts.

Adding uncertainty are global risks, such as the Middle East conflict, China’s economic slowdown, trade tensions and the effects of US tariffs. Along with these, the escalating climate crisis, volatile commodity prices and continued tightening of global financial conditions, triggered by high global energy and food prices threaten growth.

Report by the African Development Bank