South Africa opens 2026 with a spotlight on the manufacturing sector, as the rest of the week brings November manufacturing production figures. Stats SA data offered a mild upside surprise in October: manufacturing production rose 0.2% year-on-year, defying expectations of a contraction. Growth was recorded in eight of 10 divisions, with food and beverages and electrical machinery providing the biggest lift.
Looking ahead, economists enter 2026 with cautious optimism. Improved fiscal indicators, easing structural constraints and better-than-expected performance in 2025 have raised hopes that the country may be on the cusp of stronger growth — provided reform momentum holds. Prof Raymond Parsons of the NWU Business School noted: “The South African economy ended 2025 in a stronger and better position than it was a year ago.
In the past few months, a number of positive developments have created what could be a turning point in the business cycle.” He sees real GDP growth reaching about 1.5% in 2026, with inflation near the 3% target and interest rates expected to decline further. PSG Financial Services chief economist Johann Els expects GDP growth to rise from 1.4% in 2025 to 1.7% in 2026, driven largely by resilient consumer spending and a gradual recovery in fixed investment. Inflation is forecast to tick up to 3.7% in 2026 before drifting lower again, while two interest rate cuts are expected in the first half of the year.
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But economists agree that stronger growth will depend on more investment. “Fixed capital investment as a growth driver in particular needs to be a much higher proportion of GDP,” Parsons said. “In 2026 we therefore need an impulse, a jolt, an acceleration in the pace of structural growth-friendly reforms to which the country is already committed.” With more than R1.8-trillion in corporate cash still sitting idle, the test in 2026 may be whether enough firms see reason to invest.
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